Amazon enters '3PL' freight brokerage market

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SEATTLE – Amazon's recent establishment of a third-party logistics brokerage operation ("3PL" for short), the company continues to expand far beyond its primary business function as a retailer. Along with its previous licensing to be a non-vessel operating sea common carrier, establishment of an aircraft fleet, and purchase of thousands of truck trailers, Amazon raises the question of how railroads fit into the big e-commerce company’s ongoing incursion into all aspects of the supply chain management industry.

The company does not have its own railroad, yet, but it is heavily involved in intermodal, especially with BNSF, and even has a patent on a robot- and drone-centered version of the old Railway Post Office.

Amazon’s recent announcements of aiming for one-day deliveries to its Prime members is a direct threat to competing e-commerce retailers. And the new Amazon brokerage venture means transportation brokers and carriers are dealing with Amazon undercutting freight rates by 26 to 33 percent, according to FreightWaves.

Although downplaying its efforts, Amazon is moving toward end-to-end supply chain involvement, ranging from the importing of goods on ships it controls to making last-mile deliveries by its own contractors competing directly with FedEx, UPS, and the U.S. Postal Service. Supply Chain News estimates Amazon has 4,500 to 7,500 truck trailers, but no tractors, relying instead on common carrier trucking companies. Also, since 2017, Amazon has been selling more products from outside sources than from itself, meaning it appears to be moving toward becoming a 3PL, says consultant Evan Armstrong.

While threatening direct competition to freight forwarders, 3PLs, air freight companies, brokers, trucking companies, and parcel delivery services, Amazon’s growing supply chain clout has minimal effect on railroads. That’s because outside of intermodal, railroads are primarily carriers of commodities and some large, high-value goods such as automobiles. Such goods are outside of the purview of Amazon; in fact, they are the kinds of freight that supply chain companies threatened by Amazon should pursue, writes Michael Bentley of Revenue Analytics in Logistics Management.

Yet, there is one unique idea Amazon has that is directly related to rail. It has patented the idea of a mobile fulfillment center contained in a shipping container. Riding a train, ship, or the highway, the container would have a robotic arm to sort products that were pre-loaded onto shelves. Controlled by wireless communication, the arm would give products to drones to fly out of the top of the container to make deliveries. The arm would also provide maintenance for the drones, including the changing of batteries.

Given the practice Amazon has of throwing all kinds of ideas against the wall to see if they stick, there’s no telling if there will ever be mobile fulfillment centers on the rails. But it’s not a new idea, just a 21st century automated version of the old Railway Post Office car where passing trains hooked or threw off sacks of mail that were sorted in transit by clerks.

NEWSWIRETrains News Wire

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