The Amazon Effect on Freight Transportation Discussed at FTR Conference

Talk about how the company Amazon is changing the future of freight transportation kicked off the final day of the FTR Transportation Conference in Indianapolis on Wednesday with a panel that included two truck fleet representatives.

There is little doubt the company that offers everything from books to bananas is changing the landscape for logistics providers, said Matt Parry, senior vice president of logistics, Werner Enterprises. He noted Amazon is forcing logistics providers to choose a niche so they can survive the future.

The panel also touched on the subject of how Amazon has changed inventory management. Paul Will, senior executive consultant for Celadon Trucking Services, noted that Amazon has greatly decreased the amount of time between the time a customer orders and product and arriving on their doorstep.

“You really think about what happens now from the standpoint of logistics and supply chain. Now you need these massive distribution centers when you are trying to get merchandise to people in just two days,” he said.

In other words, how will the freight transportation industry get merchandise to people who want it practically immediately, including in a matter of hours, not days?

He also pointed out that trucking companies will be challenged with delivering products as their customers have increasingly different ways to interact with consumers through omnichannel retailing.

“The Amazon effect is our expectations are so much greater now to get stuff,” Will said. This includes customers demanding cheap to no cost shipping, and shippers having to figure out where the product is coming from and how it is tracked, all of which will make for rapid changes in the trucking and logistics sectors.

Both Parry and Will said Amazon has also upended so-called final mile deliveries, with new players coming into the field. This includes what many refer to as the “Uberization” of deliveries, with independent drivers delivering parcels, much the same way independent drivers shuttle around passengers with their own cars.

“The numbers of deliveries to homes is going to do nothing except increase,” Parry said. “What remains to be seen is if that’s just going to be just the traditional items you see today, or whether it’s also food items, even the nontraditional where people are embracing they can even buy mattresses online.”

He said with such changes possible and the landscape changing so dramatically, there should be plenty of room at the table for many different kinds of freight transportation providers to deliver goods straight to people’s homes.

Parry also said the rise of Amazon has also likely helped further fuel the development of safety technologies seen on more and more trucks, and has likely also sped up work to develop fully autonomous trucks.

“We embrace and look forward to the quest for autonomous vehicles, he said. “We may debate whether that’s five years away or 10 years away, but moving from Level 1 to Level 5 (the latter being a fully autonomous vehicle) autonomous vehicles is absolutely something large trucking companies welcome, because the technology on the way get there brings advantages every day.”

Parry said he envisions a day when the rear-end accident – which he said is the most severe and the biggest risk in most of the accidents in the trucking sector – is a thing of the past.

“We’re not that far away, without that robot driving the truck, to having such safeties on equipment that’s better for the drivers as they move down the road,” he said.

Others on the panel were Dan Penovich, president of Mitsui Rail Capital; Emily Stalker, president of SOMA; and Michael Baudentistel, analyst with Stifel.