On Wednesday, shares of several major freight carriers experienced a significant decline after Amazon announced it would open its trucking services to businesses outside its own network.
The e-commerce retail giant stated that, as part of its emerging "Amazon Supply Chain" program, it will offer less-than-truckload shipping services to all businesses, no longer restricting it only to merchants shipping goods into its warehouses and fulfillment centers. This service can deliver goods to any destination within the United States.
Less-than-truckload shipping refers to a service where a carrier consolidates shipments from multiple customers onto a single trailer for transport, rather than providing a full truckload for a single client.
Shares of Old Dominion Freight Lines plunged more than 6%, while ArcBest shares dropped 4%. Saia and XPO Logistics shares both fell 5%. Shares of FedEx Freight, which was spun off from FedEx and began trading independently earlier this month, also declined approximately 3%.
Over the past few years, Amazon has built a vast logistics empire and reduced its reliance on third-party carriers, primarily to meet its own needs and achieve increasingly faster delivery times. Its logistics network includes an Amazon-branded fleet of cargo planes, tens of thousands of delivery vans, and a growing freight service encompassing 80,000 trailers and 24,000 containers.
Jim Ruiz, Director of Amazon Freight, said in a statement, "Feedback from Amazon sellers using our less-than-truckload service has been clear: they need the technology, visibility, and reliability we provide and want to use these services more broadly. Now, Amazon Less-than-Truckload can ship your goods wherever they need to go, serving businesses of all sizes nationwide."
Amazon has been increasingly spinning off more of its internal logistics services for external use, posing a growing threat to established industry giants.
Last month, Amazon launched an "end-to-end" supply chain service, integrating several of its logistics and freight offerings into a single comprehensive solution. Following that announcement, shares of rival carriers United Parcel Service Inc and FedEx both moved lower.
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