Amazon, the eRetail giant, is no stranger to making waves in the supply chain industry. However, something new is afoot, in the form of an app for truckers. The Amazon app for truckers, which is scheduled to launch in summer of this year, looks set to connect drivers directly to shippers.
Rumours are rife, and there is a huge amount of secrecy about the app, but it’s almost certainly going to change the logistics industry.
Current Systems and Why Amazon are Looking to Change Them
The trucking industry is worth hundreds of billions globally. At present, Amazon uses other delivery companies to handle their shipping. In this system Amazon has to go through a ‘middleman’ to connect drivers to the cargo that needs shipping. These middlemen typically take around 15% in commission. This is a big hit for Amazon. Citigroup estimate that Amazon could save a whopping $1.1bn annually by handling their own shipping (fortune.com).
This is a huge concern for Amazon. The Amazon Prime service is hugely popular and has been immensely profitable, with Prime members spending considerably more than non-Prime members. However, with Prime comes free shipping. Shipping prices are rising globally, and so Amazon’s profit margins here are taking a hit.
What Will the Amazon Truckers App Do?
There is a web of secrecy surrounding the development of the app at the moment, but it’s thought the primary aim will be to bring the inflated shipping and logistics costs more directly under Amazon’s control. The rumour is that Amazon is going to become a full scale logistics company with their own control over the entire delivery cycle (uk.businessinsider.com). It’s thought that in practice the app will therefore look something like an ‘Uber for Trucking’.
If this is the case, then the Amazon truckers app would likely involve core elements of both logistics pricing as well as GPS-based driving and routing. The app will likely manage dispatch and may include both GPS vehicle and package tracking as well as payment systems. It could in practice result in a form of expansion on Amazon Flex, the system that currently allows private drivers to be Amazon delivery drivers using their own vehicle.
The Future of the Amazon App for Truckers
As the year progresses, it is likely that more will become known about the Amazon Truckers App given that it is due to launch in Summer 2017. There is no doubt that Amazon is developing something, and with good reason. Investment bank RBC Capital Markets has forecast that Amazon will exceed both Fedex and UPS in the years to come in terms of package volume, so it certainly makes sense for them to control their own delivery cycle. This app would make that a reality.
As Amazon continues to recruit heavily, and purchase thousands of trucks, and planes, it is most likely that the app will result in Amazon logistics being an entire and separate entity.