20 DC VELOCITY JANUARY 2018 www.dcvelocity.com
newsworthy
By controlling its transport network, Amazon could
efficiently position assets so fully loaded trailers move
between sorting centers and hubs over the shortest possible
distances, thus maintaining its delivery commitments while
shaving transport costs, the source said. Amazon also has a
seemingly unlimited supply of capital from patient investors that could be deployed for needed investments.
However, developing a nationwide one- or two-day
delivery network, especially with assets it doesn’t own, will
be a daunting challenge even for a company of Amazon’s
operational prowess. The source said Amazon would need
to rapidly increase the number of U.S. sortation centers;
according to MWPVL, there currently are 46 such facilities.
Amazon may also face challenges in serving businesses with
their own warehouses that are outside of its fulfillment ecosystem, and it may encounter turbulence flexing its business
to accommodate seasonal changes in demand. Amazon
may also struggle, as so many companies currently do, to
recruit enough qualified drivers to significantly scale up the
long-haul part of its business.
“Amazon is not immune from any of the challenges facing companies in the transport area,” the source said.
POTENTIAL IMPACT ON THIRD PARTIES
In some ways, the transport program is following a pattern
similar to another pilot, called “Seller Flex,” that launched
on the West Coast last year. Under Seller Flex, Amazon
picks up goods from companies that sell on its website
but don’t use its fulfillment services and delivers them to
the end customer. That program, which is aimed in part
at taking pressure off of Amazon’s fulfillment system, may
be rolled out nationwide this year. Seller Flex could deal a
harsh blow to third-party warehouse operators if Amazon
convinces their customers to join the FBA network.
The transport program could affect Amazon’s large car-
rier partners in much the same way, particularly if Amazon
takes a share of business in areas it could not or would not
handle before. According to the source, third-party carriers,
while still being involved in the program, would receive less
money from Amazon because the e-tailer would be per-
forming—at lower prices—some services that the carriers
had been handling. That shift, combined with Amazon’s
considerable buying power, would give the e-tailer com-
pelling leverage with the incumbent carriers in rate nego-
tiations, the source said. The big carriers could walk away,
but in so doing would be relinquishing large volumes of
business, the source said.
As it has done in the past, Amazon will quietly work
out the transport program’s kinks in the demanding Los
Angeles-Orange County markets before expanding it to
other regions, the source said. Given the company’s pattern
of rapidly scaling up its programs once Bezos pushes the
button, the source said, it would not be surprising if the
country wakes up one day in the not-too-distant future to
find that “the service is in 20 markets.”
—M.S.
alliances
Pizza Wholesale of Lexington Inc., a founding distributor of Hunt Brothers brand pizza, has deployed Cloud
Logistics’ transportation management system to manage
its logistics network. … I.D. Systems Inc. has announced
that the Toyota Motor North America Service Parts
and Accessories Operations group has purchased its
PowerFleet industrial vehicle management solution for
11 parts distribution centers throughout the U.S. …
Ocean Network Express Pte. Ltd. has selected software
developer Xvela’s cloud-based Collaborative Stowage
solution to meet its stowage planning needs. … Apparel
and lifestyle products retailer Need Supply Co. has
signed a three-year contract for the implementation of
the Snapfulfil cloud warehouse management system.
… Schneider, a provider of transportation and logistics
services, has selected FourKites to provide real-time
freight visibility for its nonasset-based supply chain man-
agement division. ... Ocean shipping technology provider
Inttra has teamed up with Transmar Corp. to provide
electronic booking and shipping instructions processing
in the Middle East, Red Sea, Arabian Gulf, and East Coast
of Africa. … Steel pallet rack manufacturer Hannibal
Industries Inc. has installed its cantilever racking system
in Western Window Systems’ new warehouse.
RK Logistics Group, a third-party logistics service provider, has opened a
new 50,000-square-foot distribution
center in Fremont, Calif. … Interstate
Warehousing Inc. has chosen Anderson,
Ind., as the home of its newest cold
storage warehouse facility. Phase I of
the project will include the construction
of a 250,000-square-foot facility. … Schaefer Systems
International Inc., a manufacturer of automation
systems, material handling products, and reusable
packaging systems, has expanded its North American
headquarters facility in Charlotte, N.C.
ground breakers
RK LOGISTICS
GROUP
