Amazon is moving assertively forward with its plans to minimize shipping costs with the development of an Uber-like application that would match truckers with the shippers that need them to move goods, a source has told Business Insider.
The app, scheduled for release next summer, would eliminate the 15% commission typically charged by third parties to broker such deals, according to the report.
Other details of the Amazon app including real-time pricing, driving directions, truck-stop recommendations, tracking and payment options, and suggested routes for pickups and dropoffs.
Nearly a year ago, two of the largest U.S. trucking companies, Swift Transportation Co. and Covenant Transportation Group, expressed confidence that e-commerce growth in general and Amazon’s growth in particular would keep their drivers busy, downplaying the online retail giant's own freight ambitions.
Amazon itself has been stung by rising delivery and fulfillment charges: While the company logged its sixth straight profitable quarter in October, its operating expenses of $32.1 billion (a 29% increase from Q3 2015) undid that almost totally. Indeed, Amazon’s fulfillment and shipping costs rose more than sales. The app described by Business Insider’s source seems to hold promise for not only mitigating those costs, but also speeding up fulfillment by using technology to swiftly match up truckers with shipping needs. Activity around the app appears to be centered in Amazon's hometown Seattle, Minneapolis and India, where logistics are particularly difficult due to a dearth of infrastructure (and where Amazon is a major player in that country’s booming e-commerce market).
In addition to Amazon, numerous startups are working to upend the third-party brokerage trucking segment, including Convoy (in which Amazon CEO Jeff Bezos has invested), Trucker Path and Transfix. All these efforts pose challenges to industry veterans C.H. Robinson (of which Amazon is a customer) and J.B. Hunt.
A whopping 84% of all freight spending is on trucking, Convoy told Business Insider. Empty trucks log some 20 billion miles per year in the U.S., Transfix founder Drew McElroy told Recode last year, making the space ripe for disruption.