This is why Amazon is apparently trying to Uber-ize the way it coordinates truck shipments across the country’s largest online retail service, as The Wall Street Journal reported this week. Amazon declined to comment for this story. But citing sources familiar with Amazon’s business, The Journal says the company may be developing a mobile app for finding available trucks and matching them with available shipments. With this Uber-like app, the company can bring some added efficiency to the shipping market and help deal with that growing driver deficit.
But this is also why Amazon will undoubtedly push towards self-driving vehicles for its long-haul shipments in the years to come.
Uber itself is already moving in this direction, after acquiring the San Francisco self-driving-truck startup Otto. Amazon is even more suited for this kind of gambit. It already controls an enormous supply chain, and inside that supply chain, it’s already using robotics to provide that added level of efficiency. In 2012, Amazon bought the robotics outfit Kiva for $775 million, and now, its technology helps move goods across the retailer’s massive fulfillment centers. If ever there was a fit for self-driving trucks, it’s Amazon.
Amazon’s genius lies in the global infrastructure it has built to move goods from place to place. This includes massive fulfillment centers that stretch around the planet; an army of warehouse robots; and hundreds of thousands of human couriers and warehouse workers. The company also runs its own fleet of trailer-trucks, flies its own cargo planes, and it’s working to build drones that can deliver packages to your door.
Shipping is one of Amazon’s greatest expenses, and it’s always looking for ways to improve the efficiency of its supply chain.
That may seem extreme. But this is the only way for Amazon to fight the constant battle against rising shipping costs. In its last quarterly earnings report, Amazon revealed that its shipping costs grew 43 percent compared to the same period one year ago, to reach $1.7 billion. Shipping is one of Amazon’s greatest expenses, and it’s always looking for new ways to improve the efficiency of its supply chain, eliminating middlemen like UPS and FedEx while adding new infrastructure and technology.
This is what the company is apparently trying to do with its Uber-like app. According to Flexport’s Petersen, much of the trucking industry depends on brokers that take about a 15 percent cut to match drivers and shipments. With an app, Amazon can cut out these middlemen. Plus, as Petersen explains, Amazon is in a prime position to reduce other inefficiencies in the system. Most importantly, it has no shortage of loads that need to be transported, and that can immediately attract drivers to the app. For others, it can be hard to bootstrap this kind of operation. They must find both supply and demand. Meanwhile, Amazon’s CEO, Jeff Bezos, has already invested in a company called Convoy, which offers an on-demand trucking service to shippers.
The Self-Driving Irony
The irony is that in the long-term, the best way to reach peak efficiency is to remove the driver entirely. And that is now a very real possibility. In August, Uber bought self-driving truck company Otto for $680 million. By October, one of the company’s autonomous trucks actually delivered a shipment in Colorado using its self-driving tech.
As Peterson says, by building an Uber-like app, Amazon is taking the natural step towards that inevitability. Just look at, well, Uber. Jeff Bezos likes to tout Amazon’s efforts to build delivery drones, particularly at this time of year. But that’s a ridiculous project compared to the efficiencies the company could gain through autonomous trucks. That’s where Amazon’s real future lies.