- Amazon has quietly expanded its freight brokerage service to 48 US states, following a trial run that was available in only 5 US states.
- The move comes as Amazon is dealing with a series of supply chain issues amid the coronavirus pandemic.
- More importantly, it shows Amazon is serious about growing its freight brokerage service, which matches truck drivers and packages that need to be shipped to other warehouses.
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Amazon has quietly expanded its service that matches truck drivers with shippers to 48 US states, as it looks to take a bigger bite out of the digital freight brokerage space.
Amazon made the expansion in March, with no public announcement, according to a person familiar with the matter. The freight.amazon.com website, which launched in 2018 with a trial service in 5 US states, has been updated to say its coverage now includes "all US states except Alaska and Hawaii."
Amazon's representative wasn't immediately available for comment.
The move comes at a time when Amazon is dealing with slowdowns across its supply chain during the coronavirus outbreak. The expansion could help Amazon find more truck drivers willing to ship packages between its warehouses across the country.
But more importantly, it signifies Amazon's desire to become a bigger player in the massive freight brokerage space that includes traditional brokers like C.H. Robinson and XPO Logistics as well as upstarts such as Uber Freight and Convoy. Amazon's nationwide expansion means it's now able to steal some of their biggest customers, according to Cathy Roberson, president of research firm Logistics Trends & Insights.
"It's going to cause a lot of the other brokers to worry about losing their [shipment] volume," Roberson told Business Insider. "They lose the volume, they lose the revenue."
For Amazon, it makes perfect sense to double down on its freight brokerage service, Roberson said. Amazon has billions of packages that need to be shipped from one location to another, so it could expedite the cargo-matching process with truck drivers. On its website, Amazon highlights its ability to secure capacity for its partners with access to technology that reduces manual work.
Amazon's freight brokerage service drew a lot of attention last year when FreightWaves reported the launch of its website and significantly low rates that appeared to undercut market prices by roughly 30%. Amazon at the time disputed the rate of its discounts.
Freight brokerage is an attractive market for new entrants like Amazon. In a note published in January, Bank of America wrote that the digitization of freight brokerage is disrupting the industry, noting the pace of disruption has accelerated in recent years. There's no clear dominant digital freight brokerage firm yet, although well-funded new entrants are gaining scale with better technology and price transparency, the note said.
Despite these efforts, however, Bank of America said the industry is still fragmented and largely controlled by the big incumbents. As the chart below by Bank of America shows, the 20 largest brokers control less than 50% of the market, with no new entrants ranking in the top 10 by revenue.
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