LTL carrier sues Amazon Fulfillment over contract breach, 'bullying'

Dive Brief:

Central Freight Lines, a Waco,TX-based LTL carrier, recently filed a lawsuit against Amazon Fulfillment Services alleging numerous contract violations and withheld payments, the Waco Tribune Herald reports.
According to the lawsuit, Amazon "bullied" the company by attempting to force Central Freight into accepting unagreed-to billing and procedure changes, and allegedly falsely claimed Central Freight was overcharging for services.
When the company resisted, Amazon reportedly terminated all contracts with Central Freight. The LTL carrier claims Amazon owes $2 million in past-due payments, and that the series of events incurred $1 million in damages to the carrier.

Dive Insight:

The case against Amazon highlights an unfortunate dynamic within supply chains, should the company be found guilty of the allegations made against it by Central Freight Lines.

According to the lawsuit, "Amazon has unlawfully used its economic power and dominance" as well as made "an unlawful attempt to throw its economic power around." Further, the suit alleges that the company "fraudulently induced Central Freight to perform additional services for Amazon for payment, when all the while Amazon had no intention of paying Central Freight for such services."

Such actions, if true, are likely to be taken only by a company over-confident of a successful outcome. With deep pockets and a strong in-house legal team, it's possible that Amazon banked on an intimidation factor by attempting to impose such onerous terms on a relatively small carrier. Meanwhile, $3 million is hardly a significant figure for a company valued at over $400 billion.

In the long run, claims of "dominance" and "bullying" could concern others vying for a chance to work with the e-commerce site. Amazon is unlikely to find itself in need of a carrier, but stepping on too many toes too often leaves a reputation, which can ultimately impact the company's ability to be viewed as a preferred client.

Regardless of the veracity of the lawsuit, the case represents a typical power dynamic within the supply chain, where the high volume buyer may induce, encourage or bully its partners into acquiescing to unfavorable terms, ultimately leading to a lawsuit if relations sour thereafter.