On Wednesday, June 10th, Amazon announced that they will now offer full LTL services to anyone. Before that, LTL was available &quot;inbound only,&quot; meaning from Amazon sellers to Amazon facilities to Amazon customers. In their press outreach, the company has touted their 80,000 trailers and 24,000 intermodal containers, as well as improved load visibility and fleet security measures. The response to this announcement was split. Traditional freight carriers like FedEx Freight, Old Dominion, and XPO lost market value, but some analysts have a different take. They are not so sure we should have the reaction we&#x27;ve been conditioned to have when Amazon moves into a new market. At least not yet. In this episode of the Art of Supply podcast, Kelly Barner covers three big questions looming over this story: - Is Amazon LTL truly functioning as an asset-backed carrier, or are they more of a broker behind a front of assets? - What kinds of shippers will the Amazon LTL service appeal to? - Do Amazon&#x27;s integrated abilities position them to completely upend how freight works? We can&#x27;t promise you will get the answer to those questions in this episode, but listeners should walk away with a better understanding of why they matter. Links: Kelly Barner on LinkedIn: https://www.linkedin.com/in/kelly-barner-6884443/ Art of Supply LinkedIn newsletter: https://www.linkedin.com/newsletters/art-of-supply-6895142546301960193 Art of Supply on AOP: http://www.artofsupply.com Subscribe to the Art of Procurement Newsletter: https://resources.artofprocurement.com/art-of-procurement-podcast-subscribe

3 Questions We Can't Answer About Amazon LTL

Art of Supply

# Full Transcript

**Podcast:** Art of Supply

## Transcript

Hi, I'm Kelly Barner and this is the Art of Supply podcast. Every business story has a supply chain angle and those stories deserve to be told. This show digs deep into news headlines and interviews thought leaders, executives, and newsmakers to capture their perspective in their own words. With no agenda to lead us in any particular direction, we'll offer you objective coverage

of geopolitics, innovation, and competition. Facts will always take precedence over hype. The rest is up to you. On Wednesday, June 10th, Amazon made the announcement that they will now offer full LTL services to anyone that wants them. Before that, their LTL services were available inbound only, meaning from Amazon sellers to

Amazon facilities to Amazon customers. Now, as part of the announcement, Amazon freight director Jim Ruiz said, quote, we built an asset backed LTL service. The company has been touting their 80,000 trailers and 24,000 intermodal containers, as well as improved load visibility and fleet security measures. Now, the response to this announcement was twofold. The market, in all its wisdom, completely freaked out.

There was a broad sell-off among the established freight carriers. Old Dominion Freightline and XPO Logistics each fell 5%. ARC Best fell 4%. SIA got off easy with a 3% fall. But shares of FedEx Freight, which, if you remember, just started trading independently 10 days before this announcement was made, fell by 7%. Now, analysts, they have a different take on this news.

They're not so sure we should have the reaction we've been trained to have when Amazon moves into a new market. Now, from my reading, there are three big questions looming over this story. Number one, will Amazon Freight truly function as an asset-backed carrier, or are they actually a broker behind a front of assets? Question two, what kinds of shippers will the Amazon LTL service appeal to?

And finally, do Amazon's integrated abilities position them to completely upend how the freight market works? Now, in this week's episode of Art of Supply, I can't promise you'll get answers to any of those questions. But I think you'll walk away with a better understanding of why asking them matters. Now, Amazon's break into third-party freight services is not a shock.

They started offering third-party full truck load four years ago. Amazon Supply Chain Services launched in May, which opened freight, distribution, fulfillment, and small parcel shipping to non-Amazon shippers. These extensions actually build off of previous pushes by Amazon into the trucking industry. For example, they developed a warehouse check-in app called Amazon Relay in 2017 and launched a load board in 2018.

With Amazon's LTL service, customers can move between one and six pallets weighing from 150 to 15,000 pounds. And the whole fleet is sensor-equipped for security. Shippers will have extensive visibility into their goods the whole time. And the...

3 Questions We Can't Answer About Amazon LTL

Transcript

Built for investment professionals

Every day you wait, your competitors are finding
edge in conversations you're not hearing.

3 Questions We Can't Answer About Amazon LTL

Transcript

Built for investment professionals

Every day you wait, your competitors are findingedge in conversations you're not hearing.

Every day you wait, your competitors are finding
edge in conversations you're not hearing.