Quantifying the Amazon Effect
Friday, November 30, 2018
Posted by: Alyce Ryan
Originally Published in the FTR Report
Written By: Avery Vise, Vice President, Trucking
In late August, we looked the effect of e-commerce on transportation volume, touching
on – but not actually naming – a concept often discussed in the industry: The
Amazon Effect. The idea is that Amazon has disrupted traditional distribution patterns,
distorting the expectations we have relied on for many years.
As discussed only briefly last month, Amazon is building out a transportation system
that ultimately could bypass the entire parcel delivery network as we know it and
deliver instead directly from fulfillment centers to purchasers through U.S. Postal
Service drop shipments and a growing network of carriers to make local deliveries.
Highlighting this development was the recent announcement that Amazon has
ordered 20,000 Mercedes-Benz Sprinter vans, making Amazon the world’s largest
As pointed out in the first part of our look at e-commerce (SEE: October’s State of
Freight TODAY), this growth is a big deal for truckload carriers. Amazon has rapidly
added to its number of fulfillment centers, and all the small purchases that are being
delivered to homes and businesses get to those fulfillment centers by way of truckload
and LTL carriers.
Let’s look at that truckload growth. When a law enforcement officer inspects a full
truckload carrier it logs the name of the shipper. (Obviously, with LTL this is not practical.)
By tracking the number of loads associated with a given shipper, you can roughly
estimate the growth in that shipper’s shipments.
Assuming this approach is valid, Amazon’s truckload shipments are, indeed, growing
as rapidly as their sales and warehousing space. In 2012, barely 1,000 inspected loads
were associated with Amazon. By 2017, that number had grown to almost 8,000. Only
a small fraction of all loads are inspected, so such growth would imply explosive
growth in truckload shipments.
Based on inspections recorded through July, Amazon is on pace to add another 17.5%
to the number of inspections that soared 96.2% and 47.3% y/y in 2016 and 2017.
However, Amazon inspections are, not surprisingly, much higher in the fall due to the holiday freight season. That means that the 17.5% run-rate so far in 2018 could easily
be much higher by yearend.
The number of truckload carriers used by Amazon similarly has grown dramatically. In
2012, just 405 unique carriers were inspected hauling an Amazon load. In 2017, that
number was just over 2,300. Again, most loads are not inspected, so the actual
number of Amazon carriers certainly is much higher.
So Amazon is soaking up significant truckload capacity, but there’s another potential
impact as the company builds out its local distribution network. Current and would-be
drivers might find the lifestyle afforded by local, non-CDL delivery more attractive than
over-the-road tractor-trailer operations. In August, these operations represented the
second-fastest-growing industry in terms of payroll employment just as they did in
With a trucking industry already unusually tight, the strength of Amazon’s holiday
season could determine how easily – or not – the U.S. freight transportation system
can handle the surge.
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