Wednesday, July 18, 2018

In the Drivers’ Seat

Scramble for last mile delivery intensifies with the new player: Amazon.

There has been a lot of discussions, including in this space, about the growing shortage of long-haul truck drivers. With the mushrooming consumer demand for expedited and “Prime” shipping, the B2C space is liable to give B2B a run for its money when it comes to the scramble for drivers.

The rush to bring everything from groceries to gourmet meals to customers’ doorsteps has sparked such a demand that job postings for delivery drivers have tripled nationwide on in the past three years, reported Bloomberg News. The dearth of truck drivers needed to carry products from city to city is well-documented, but the growth of e-commerce depends as much or more on a steady supply of qualified last-mile car and van drivers.

Amazon, which has disrupted so many industries, and is largely responsible for the burgeoning need for last mile/last touch delivery capacity, is moving even more heavily into the retail delivery space. Augmenting its existing fleet of over 30 cargo airplanes, thousands of 53-foot trailers, and a cadre of independent delivery drivers, the company is competing directly with UPS, FedEx and the Post Office, while continuing to utilize those services.

At the end of June, Amazon announced plans to build a network of independent delivery companies, to put Amazon products, and others, into the hands of consumers, and incidentally be the entity, rather than Amazon itself, that hires the individual drivers. Amazon is hiring delivery companies, not delivery drivers. By doing so, Amazon hopes to avoid the issues that have bedeviled carriers such as FedEx, as to whether the drivers are its employees or independent contractors.

Currently delivering 7 million packages per day, with volume growing 18-20 percent per year, Amazon can feed its own pipeline while still employing the delivery carriers and methods it has used to date. Along with the Brown/Purple parcel duopoly, this includes the United States Postal Service, which could eventually become the big loser under Amazon’s scheme. 

With Amazon now boasting over 100 million Prime members, and Prime Free Same-Day delivery and Prime Free One-Day delivery now in 8,000 cities and towns, the biggest winner may be the consumer, along with those shippers who take advantage of diverse delivery choices. All they need is a supply of drivers.

The battle to control the last mile shows how much Amazon upends business segments it enters, and how the seemingly fixed and immutable small package universe can change virtually overnight. 

Kirk Shearer
President & COO
(973) 726-2103
TOTALogistix, Inc.

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