Reuters
- Amazon launched a trial version of its online freight brokerage platform on Friday and undercut market prices by as much as a third, according to FreightWaves.
- The e-commerce giant has decided to cut out the middle man and act as a broker between shippers and truckers, giving it more control over its access to trucking capacity and the price it pays.
- It’s competing with companies such as C.H. Robinson and Uber Freight.
- "Amazon Freight is a free, marginless brokerage," said FreightWaves.
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Days after raising the bar for retailers by moving from two-day to one-day shipping for Prime members, Amazon is racing to disrupt another industry. The e-commerce giant launched a trial version of its online freight brokerage platform on Friday, undercutting market prices by more than a quarter, according to FreightWaves.
Amazon, which delivered a first-quarter earnings beat last week, relies on a nationwide network of trucking carriers to move huge volumes of products across America. It has decided to cut out the middle man and act as the broker between shippers and truckers. As a result, it should have greater control over its access to trucking capacity and the price it pays.
Initially, Amazon is offering access to a 53 foot full truckload dry van freight in New York, New Jersey, Pennsylvania, Connecticut, and Maryland, according to FreightWaves. It charges about $709 to transport freight from Albany, New York to Washington, D.C. — a discount of just over 33% to DAT’s broker-to-carrier spot rate of about $1,066, according to FreightWaves, which described the service as a "free, margin-less brokerage."
Amazon is sticking to its tried-and-tested recipe for market domination: undercut competitors and rack up losses as it captures market share, then raise prices and turn a profit once it’s gained traction and scale and driven rivals out of business.
"Tap into the scale of Amazon as we extend our carrier network to give you best-in-class service at great rates," the platform’s website reads.
The service competes with veteran brokers such as C.H. Robinson as well as upstarts such as Uber Freight, a "transparent, on-demand marketplace that seamlessly connects shippers and carriers" and netted $125 million in revenue in the fourth quarter of 2018, according to the ride-hailing group’s recent IPO filing.
Amazon’s newest business may not be as eye-catching as its latest Alexa smart speaker or Prime Video original series, but it gives the company more control over its supply chain and another advantage over its rivals.
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Source: Business Insider – tmohamed@businessinsider.com (Theron Mohamed)