Amazon Buys Thousands of Truck Trailers as Shipping Ambitions Grow

  
Ken James/Bloomberg News/Getty Images

Amazon goes to great lengths to get packages into customers’ hands as quickly as possible — even if it means employing drones. Those efforts will now include putting thousands of Amazon-branded trucks on the road.

The ever-ambitious online retailer planned to announce on Friday morning that it had purchased “thousands” of trailers — the part of a tractor-trailer that stores the cargo — to make sure it had the shipping capacity to move products on time as its North American business continues its rapid growth.

The trailers won’t be used to deliver packages to customer doors. Instead, they’ll be utilized to transport items from one Amazon warehouse, known as a fulfillment center, to another, as well as between fulfillment centers and sort centers, where Amazon organizes orders by zip code to be delivered to local post offices. A spokeswoman stressed that Amazon would continue to rely on existing trucking partners, which own and drive the tractor portion of the vehicles that will tow the Amazon trailers.

“The reality is we utilize a lot of great companies, but we do see the need for additional capacity,” she said.

The announcement comes as Amazon’s North American retail business is growing at its fastest clip in several years. Revenue for this unit grew 35 percent in the third quarter, fueled by product assortment expansion in categories such as apparel and the growth of Amazon’s hugely popular Prime membership program.

The trucking announcement marks the latest initiative aimed at taking more control over how quickly the company can get goods into the hands of its customers. While Amazon continues to utilize trucking partners to move goods within its warehouse network, and UPS and FedEx for package delivery to customer doors, it is increasingly unveiling initiatives to take over more of these functions.

In Los Angeles, for example, Amazon has been partnering with local courier services to deliver both traditional goods as well as groceries to customers instead of utilizing UPS or FedEx. Its year-old Prime Now service, which offers delivery within one or two hours of ordering, is also operated by couriers as well as independent contractors who want to make a little extra money. Amazon also delivers groceries in some cities in its own Amazon Fresh trucks and in recent years has paid the United States Postal Service to deliver Amazon packages on Sundays.

Former employees say the goal is to someday be able to circumvent UPS or FedEx entirely, in large part so that snafus like the one that caused late deliveries during the 2013 holidays don’t happen again.

One guess on why Amazon only wants to own the trailer at this point: If it owned the tractor, it would have to register as a commercial trucking company and incur the insurance costs and liability risks that come with that. By sticking with just the trailer body, Amazon potentially saves money and avoids other potential headaches. That said, some reports suggest Amazon may eventually go all the way and own the trucks, too.

The news is expected to come at an event in Chicago at which Amazon would announce the donation of 2,000 packages to U.S. military members stationed in combat zones around the globe.

Written Jason Del Rey of Re/Code

(Source: Re/Code)

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