Amazon has introduced its freight broker platform (AMZN)

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Amazon has launched its freight brokerage platform, according to FreightWaves. The online service, which is currently in beta in Connecticut, Maryland, New Jersey, New York, and Pennsylvania, enables shippers to get instant quotes and match with a freight service.

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Amazon isn’t providing capacity on its own vehicles as part of the platform, but rather is brokering access to trucking partners on its network.

Here’s what it means: Freight brokers should be extremely worried as Amazon enters the lucrative space — the freight brokerage market was worth $72 billion in the US in 2017, according to figures cited by Uber in its S-1.

Amazon has the resources to undercut all of its competitors on price. Amazon boasts an extensive network of shippers and carriers that are already moving goods through its ecosystem. As such, the company has long had the infrastructure in place to broker the movement of these goods without taking on a significant investment. This enables them to offer much lower costs than competitors: Amazon’s service comes at prices that are 26% to 33% lower than the market, according to analysis by FreightWaves. For example, the service lists a rate of $765 to transport freight from Baltimore to Manhattan, a 33% discount from DAT’s broker-to-carrier spot rate of $1,139.
The sheer size of Amazon’s e-commerce offerings places it in a strong position to attract shippers to its platform, as they are likely already doing business on the firm’s core site. Amazon will control 40% of the US e-commerce market by the end of 2019 and 49% by 2023, making it a key strategic partner and revenue source for all its shipping partners. And retailers have already shown interest in an Amazon logistics service — 55% of retailers said they’d consider moving their business to Amazon if it announced a parcel delivery service, per IR Research.

The bigger picture: No logistics player is safe from Amazon’s ambitions in the space. The company is quickly building out shipping capabilities that could one day rival those of major firms such as UPS, FedEx, and C.H. Robinson.

For example, in February 2018, the firm latched Shipping with Amazon (SWA), which is a service that sees Amazon picking up parcels from third-party merchants on its e-commerce marketplace and routing them through its own delivery network or other carriers.

And in June 2018, Amazon introduced a program that enables businesses to set up their own delivery companies and bring customers parcels for Amazon. Known as Delivery Service Partners (DSP), the program allows companies to lease up to 40 Amazon-branded Daimler delivery vans.

If legacy players don’t move quickly to counter Amazon’s aggressive build out, they could soon see their respective markets upended by the e-commerce giant as it begins to offer services to non-Amazon customers.

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Source: Business Insider – aaouad@businessinsider.com (Ayoub Aouad)