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Amazon Strikes a Blow in the Logistics Industry Jeremy Bowman
Amazon Strikes a Blow in the Logistics Industry
Jeremy Bowman, The Motley Fool
February 18, 2019, 2:17 PM GMT
For years, rumors have been building of Amazon.com's (NASDAQ: AMZN) intentions in logistics and delivery. The company has added fulfillment and logistics services to the list of competitors in its 10-K report, and has unveiled a program called Amazon Shipping, whereby the company picks up and delivers other shippers' packages. In recent earnings calls, CFO Brian Olsavsky has also begun talking more about the company's ambitions in logistics.
However, the clearest sign yet of Amazon's potential impact in the industry came from the recent earnings report from XPO Logistics (NYSE: XPO), one of the biggest global providers of freight and logistics services and the leader in last-mile delivery of heavy goods like furniture and appliances. In its fourth-quarter report, XPO slashed its 2019 guidance significantly, and its shares fell by double digits on the report. The culprit was "the impact of our largest customer substantially downsizing its business portfolio," according to CEO Brad Jacobs. Jacobs went on to explain on the earnings call that XPO would lose $600 million in annual business from this customer, who was reducing business by two-thirds.
Though Jacobs did not name the customer, it was widely assumed to be Amazon. Jacobs explained that the business his company lost was postal injection, or bringing truckloads of packages in high volume to the post office. He also explained that postal injection has low barriers to entry and is therefore not as protected as the company's business doing last-mile delivery of heavy goods.
Much more at the link: https://finance.yahoo.com/news/amazon-strikes-blow-logistics-industry-141700863.html
Jeremy Bowman, The Motley Fool
February 18, 2019, 2:17 PM GMT
For years, rumors have been building of Amazon.com's (NASDAQ: AMZN) intentions in logistics and delivery. The company has added fulfillment and logistics services to the list of competitors in its 10-K report, and has unveiled a program called Amazon Shipping, whereby the company picks up and delivers other shippers' packages. In recent earnings calls, CFO Brian Olsavsky has also begun talking more about the company's ambitions in logistics.
However, the clearest sign yet of Amazon's potential impact in the industry came from the recent earnings report from XPO Logistics (NYSE: XPO), one of the biggest global providers of freight and logistics services and the leader in last-mile delivery of heavy goods like furniture and appliances. In its fourth-quarter report, XPO slashed its 2019 guidance significantly, and its shares fell by double digits on the report. The culprit was "the impact of our largest customer substantially downsizing its business portfolio," according to CEO Brad Jacobs. Jacobs went on to explain on the earnings call that XPO would lose $600 million in annual business from this customer, who was reducing business by two-thirds.
Though Jacobs did not name the customer, it was widely assumed to be Amazon. Jacobs explained that the business his company lost was postal injection, or bringing truckloads of packages in high volume to the post office. He also explained that postal injection has low barriers to entry and is therefore not as protected as the company's business doing last-mile delivery of heavy goods.
Much more at the link: https://finance.yahoo.com/news/amazon-strikes-blow-logistics-industry-141700863.html