Amazon as a common carrier, just like railroads

New status enables retail giant to act like and compete with Wal-Mart and FedEx at the same time
Trains Industry Newsletter
Get a weekly roundup of the industry news you need.
By signing up you may also receive occasional reader surveys and special offers from Trains magazine. View our privacy policy.
Speculation grows about Amazon’s increasing role as a freight carrier and what that may mean for suppliers of transportation services by air, truck, water, and perhaps eventually by rail. Since what has been termed the “2013 Christmas Fiasco” in which United Parcel Service failed to deliver Amazon packages before Christmas Day, Amazon has been assuming more functions previously left to its transportation suppliers.

Since the 2013 stumble, the e-commerce giant has begun its own sorting operations, bought thousands of truck trailers, launched an Uber-like package delivery service, started grooming an airport to be a hub for the dozens of Boeing 767 aircraft it has leased, become a freight broker, and received licensing to be an ocean carrier.

“Since when does a retailer need an airport hub?” writes Itamar Zur, co-founder of delivery service Veho in Amazon’s move into logistics and transportation has not just been for itself. Starting in October 2017, Amazon used its Seller Flex warehouse and logistics services to displace FedEx and UPS in picking up packages from partner merchants’ warehouses for delivery to Amazon distribution centers.

By February 2018, Ship-with-Amazon was providing delivery services to other merchants and by mid-year, for a $10,000 fee, Amazon was offering entrepreneurs opportunities to start last-mile transport services entailing 40 Amazon-emblazoned vans. In 2016, through its China subsidiary, Amazon received Federal Maritime Commission status as a Non-Vessel Operating Common Carrier, essentially making it an ocean carrier that buys space on other carriers’ ships. By early 2018, Amazon had brought some 5,000 containers into the U.S. — a trickle as far as overall imports go, but a substantial move for a company with a retailer identity.

While FedEx founder Fred Smith argues “Amazon is a retailer; we are a transportation company,” some analysts believe Amazon eventually will be a full-fledged carrier seriously competing with FedEx and UPS. FedEx has downplayed the threat, saying Amazon cannot replicate its infrastructure. But Zur says legacy infrastructure is a problem: it’s designed for business-to-business operations, not retailing, and Amazon makes nimble use of information technology focused on end consumers.

In early 2018, Amazon had been rumored to be purchasing XPO Logistics, a less-than-truckload carrier with strong last-mile-delivery capability for bulky items like appliances and furniture. The apparent deal evaporated in a bidding war for XPO prompted by major appliance retailer Home Depot’s reported attempt to fend off Amazon.

One analyst, Craig Fuller of Freightwaves, says attempting to blend clunky less-than-truckload operations into sleek Amazon practices made XPO the wrong target. Also, LTL carriers tend to have a disproportionate share of retail customers. They would flee a carrier owned by a competitor. A better purchase, Fuller writes, would be J. B. Hunt. Hunt has moved away from its traditional truckload business, positioned itself more as a consultant or what is known as a third-party logistics provider, and developed emphasis on last-mile delivery contracts.

An intermodal pioneer from the fusion created almost 30 years ago with BNSF predecessor Santa Fe, much of Hunt’s truckload business and half of its revenue is intermodal. Purchasing J. B. Hunt, Fuller says, would not only give Amazon the last-mile benefit of a carrier like XPO, but would provide Hunt’s intermodal network and varied third-party logistics services.

Zur believes Amazon, still dependent on UPS and FedEx will, over the long-term cherry-pick the most profitable urban-density business away from them. And, he says, Amazon tends to develop partners but then competes with them as what happened when Toys R’ Us and shuttered book retailer Borders allowed Amazon to run their e-commerce. Both went bankrupt and were liquidated and Zur believes the downfall of Toys R’ Us began with its association with Amazon.

“Asset-based infrastructure such as rail and maritime companies are still needed, unless, of course, we see Amazon Rail, Amazon Ocean. Virgin was a record store. Then an airline. Now, Virgin Trains,” says a strategist for a U.S. third-party logistics and consulting, who requested anonymity.

With ongoing Amazon growth — $233 billion revenue in 2018 — investor patience dating back to its earliest days, creative software applications, and its development of new forms of competitive advantage it’s difficult to see what the company will become and how it might change the transportation landscape.

NEWSWIRETrains News Wire

  • Previous Day
  • February 06, 2019
  • Next Day
Leave a Comment
Want to leave a comment?
Only registered members of are allowed to leave comments. Registration is FREE and only takes a couple minutes.

Login or Register now.
Please keep your feedback on-topic and respectful. Trains staffers reserve the right to edit or delete any comments.


BNSF Railway's Willow Springs Intermodal Yard 


Learn more about the stories and photos in this months issue

Newsletter Sign-Up

By signing up you may also receive occasional reader surveys and special offers from Trains magazine.Please view our privacy policy
Subscribe Up To 54% off the newsstand price!
Subscribe To Trains Mag Today