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Is Amazon Trying To Build Its Own Shipping Network?

Amazon has been moving into managing how its products get from the warehouse to the customer’s door. Their latest involves building their own logistics and delivery network.

Word is they are developing an app that closely resembles something like Uber, but would in this case match truck drivers with cargo. Per sources, Amazon has been on a hiring spree and is looking to next summer as a potential roll out date.

The app itself would integrate several aspects of getting freight to its final destination, from pricing to routes and trucker-specific information. Need truck stop options? Amazon’s app will provide them.

As of late, Amazon has used their decentralized trucking infrastructure to make a broader push into handling their own shipping. Could this mean they may eventually compete with – or take business from – companies like FedEx and UPS?

Where else might Amazon be moving into a new direction?

Drone Delivery

Amazon recently revealed that in certain cases drones will be able to deliver products to customers within 30 minutes. Rather than using a truck, Amazon would move the packages between fulfillment center and customer by drone.

Drone delivery would essentially allow the company to provide on-demand delivery of items within a certain geographic area. Rather than waiting days for an item, Amazon could deliver it within a half-hour.

Of course, this method is not without logistical, practical and regulatory challenges. Whether it be governing drone movement or handling lost packages, there are special considerations to be made for this method.

Branded Trucks

Amazon’s intentions should be clear at this point. It plans to expand control over its shipping resources though moves like deploying thousands of branded tractor trailer trucks.

This is great news for those worried that drones might lead to job losses. The trucks would be used to carry out deliveries much the same way a contracted motor carrier would. These wouldn’t be driverless autonomous trucks. Yet still, Amazon is suddenly a fleet unto itself.

Interestingly, brick-and-mortar retailers are taking notice. Target has announced plans to partner with an on-demand grocery delivery service while Walmart toys with ways to accelerate delivery times to consumers.

Air Cargo Network

Not to be deterred at the idea of taking over its own land travel, Amazon has moved into leasing its own planes. The move could only mean the company intends to create its own air cargo network.

Through their fulfillment arm, Amazon Fulfillment Services, Amazon has reportedly signed the 20 leases for somewhere between five and seven years. Dave Clark, Amazon’s senior vice president of worldwide operations and customer service recently said that the move would “ensure air cargo capacity to support one and two-day delivery for customers.”

Amazon’s Imperative

Consider that Amazon spent over $8.7 billion on shipping costs in 2015, and it’s no surprise the company is making these moves. If they can create their own multi-level shipping network, they can eliminate much of these costs.

While some may wonder if Amazon can complete this Herculean task, others point to their efforts in cloud computing, where they’ve turned their vast network of servers into a vital asset. Could Amazon shipping services become a business in its own right?

Others worry Amazon’s efforts may lead to trucking industry job losses, their CFO Brian Olsavsky was recently quoted saying the company is “adding more logistics to supplement existing shipping options, and it’s not meant to replace them.”

Still, there are questions. What would Amazon’s move into managing its own shipping do to companies operating at trucking’s periphery? Certainly, this is a question left for the future to answer.

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