Truck Company Incubation Startup by Amazon
SEATTLE, Wash. — As part of their next step to establish an assured capacity for its delivery network, Amazon has launched Grow it in-house.
Based out of Seattle, Amazon Inc. is launching a program that will effectively provide hundreds of people to start their own business. Truck company startups that will haul only Amazon goods. As of a publication published Friday, February 5, 2021, Amazon e-commerce consultant Brittain Ladd stated that he was made aware of the program in 2020 and that the company plans for it to be operational fully by the end of the second quarter.
Information sourced from an Amazon company document states that they will create a system to essentially “incubate” new entrepreneurs looking to start their own commercial trucking business. The company would provide loans and business training to these individuals. The idea came about when Amazon began to recruit Delivery Service Providers in 2018. These providers recruit drivers to work mainly for Amazon.
Amazon’s goal in using Delivery Service Providers was to augment their in-house fleet operations by using contractors to hire thousands of drivers across the nation. Each contractor would control dozens of drivers.
However, the volume of Amazon’s deliveries has soared and while two-thirds of their deliveries are handled in house, which is much higher than the percentage from 2018. As the demand for e-commerce continues to grow, and many drivers retiring, the company is faced with the potential decision of handling its own shipments or contracting them to other companies.
Brittain Ladd made this comment on the capability of the company to keep up with demand. “I don’t believe Amazon will be able to generate anywhere near the needed trucking capacity to keep up with increases in traffic.”
With a cap of around $1.6 trillion, Ladd said that the company should look into making acquisitions along the trucking supply chain. Amazon should seriously consider acquisition of one or more truckload companies. No company names were offered.
It has also been suggested that Amazon acquire Convoy, a digital brokerage platform designed by former company executives. Jeff Bezos, Chairman and former CEO of Amazon and the company founder, is an investor in the platform. According to Ladd, “Convoy is an ideal platform to keep the carriers that Amazon contracts with operating efficiently at all times, even when they’re not hauling freight for Amazon.”
Chief Technology Officer at Flexe, an on demand warehousing company, David Glick states that the Amazon program to “incubate” new companies is aimed more towards the future of the company rather than the current state of the company. He stated, “Amazon is always planting seeds which will grow into trees in five to seven years, so they are looking at delivery capacity several years out.”
Amazon should focus on creating a network of commercial trucking companies, including fleets sponsored by the company. This should be built from the ground up and not revolve around getting more trucks out and driving.
Using this collaboration, any truck within the network could pull any trailer and any driver could drive any truck. Ladd said, “This will ensure trucks are able to operate nearly continuously because drivers with available driving hours will keep the trucks going.”