Dive Brief:
- Amazon quietly launched a digital freight brokerage website at freight.amazon.com, just on day after announcing Prime free shipping would transition from two days to one. FreightWaves was first to report the news.
- The pricing offered on Amazon's platform is roughly 30% below market rate, based on FreightWaves analysis.
- "Tap into the scale of Amazon as we extend our carrier network to give you best-in-class service at great rates," reads the site. Amazon has yet to formally announced the service.
Dive Insight:
Amazon's relationship to profitability has always fit the tech company mold rather than the retailer mold — where the new player undercuts competition sacrificing margin for years before eventually using scale and some price increases to regain profitability after achieving relatively quick market domination.
The aggressive pricing, which FreightWaves concludes likely yields no or even negative margins, suggests Amazon wants a larger piece of the freight pie than what its trucks have extra time to deliver.
Amazon has been quietly but not inconspicuously building its logistics arsenal with trucks, vans and aircraft. Executives at the company have traditionally insisted this capacity is meant to supplement existing third-party freight and logistics service providers. Launching a freight brokerage platform suggests the company is changing that practice, boosting capacity beyond immediate need.
Freight brokerage is already in the midst of a shakeup from digital native players in the form of digital freight matching services like Convoy, Transfix, Uber Freight and Loadsmart. These players don't compete on rate as much as on service and value — offering data that can help shippers maximize the efficiency of their operations.
It is as yet unknown what kind of data or service Amazon will offer, but well-below market prices will create the starkest test yet of what is most important to shippers.
