Amazon Launches Less-Than-Truckload Unit

The unit will make Amazon’s transportation, fulfillment and parcel delivery network available to other businesses. (Michael Nagle/Bloomberg)

Amazon formally unveiled a less-than-truckload arm for its Amazon Supply Chain Services division June 10, expanding its LTL operations beyond the e-commerce giant’s own marketplace.

The announcement follows ASCS’ Amazon Freight unit stepping out of the shadows May 4 after months of rumor. The unit will make Amazon’s transportation, fulfillment and parcel delivery network available to other businesses.

Amazon already has LTL experience. In 2019, Amazon LTL began serving Amazon sales partners and vendors.

“The feedback from Amazon selling partners using our LTL service was clear: The technology, visibility and reliability were exactly what they needed — and they wanted to use it more broadly,” said Jim Ruiz, director of Amazon Freight.

“Now Amazon LTL can move your freight wherever it needs to go, servicing destinations nationwide for businesses of all sizes. With LTL, shippers get cost-effective freight shipping while still benefiting from the real-time tracking and dependability they expect from Amazon,” Ruiz added.

However, analysts noted a relatively low number of service terminals initially compared with existing players, indicating a more asset-light model for the venture than is typical in the sector. Estimates on the number of cross-dock facilities come in at various points under 100, compared with an average of nearly 300 for the top five players in the space. Observers also noted that the service would hew more toward three- to four-day economy lanes.

Amazon LTL will offer next-day live pickup for orders placed by 5 p.m., same-day pickup through Amazon’s drop trailer solution and standing daily pickups for high-volume shippers. The company will ship the typical one to six pallets, weighing 150 to 15,000 pounds, to any U.S. destination.

Shares of publicly traded LTL carriers fell June 10 following the Amazon announcement.

Old Dominion Freight Line’s stock price was down nearly 6% at 1 p.m. Eastern time. The share price of FedEx Freight, the largest LTL carrier, was also down about 6% at the same time.

FedEx Freight spun off from FedEx Corp. on June 1. The carrier is promising to aggressively chase business in verticals where its predominant position in the LTL segment of the freight market has not translated into as much business as executives would like.

Those verticals include food and beverage, healthcare and small- to medium-size businesses. Each is a segment Amazon is targeting, too.

Amazon’s entry into the LTL segment was anticipated, and FedEx Freight CEO John Smith told Transport Topics in an exclusive interview: “LTL remains a highly specialized industry with significant barriers to entry including dense terminal networks.”

“From a FedEx Freight perspective, Amazon does not have the network, in our opinion, to run an LTL-type company. That’s not saying that we don’t watch things that Amazon does, but from our perspective, we don’t feel like that it’s going to be an impact to our business,” Smith said.

Amazon Freight spans full truckload, LTL and rail services. The company operates more than 80,000 trailers, 24,000 intermodal containers and terminals across major U.S. metropolitan areas.

Amazon said Procter & Gamble, 3M, Lands’ End and American Eagle Outfitters will be among the first shippers using the wider service.

Analysts said parcel giants — including FedEx Corp. — were likely to be the hardest hit by the May announcement, especially in non-commoditized retail verticals, as well as third-party logistics firms, such as GXO, serving blue-chip businesses. Another legacy segment that should be paying close attention is freight forwarders supporting retail customers, one analyst said.

Amazon ranks No. 1 on the Transport Topics Top 100 list of the largest logistics companies in North America and No. 1 on the TT Top 50 list of the largest global freight companies.