12-14-2017, 05:50 PM
There are two issues driving this.
1. Operating authority. Their are two kinds of licenses that the government issues for carriers. Carriers for hire (your standard carrier) and Household goods/Personal goods carriers. The reason for this is there are laws that govern tighter restrictions for moving Household goods. There is a 200 year history of people being robbed or abused when it comes to household goods since people have so little leverage vs. commercial customers. Household goods carriers are carrier like Allied Van Lines who move people from one home to another.
Amazon moves a ton of personal/household goods so their is literally not enough capacity for them to deliver those kinds of products. UPS and FedEx are not licensed to move Household goods nor are they going to be doing it anytime soon. Their is too much liability and of course there is issue number 2 below. Ultimately Amazon needs a type of carrier that really doesn't exist today.
2. There is no money is this business. It is a poor business model for carriers to take on Amazon. We move a ton of there shit now and it is simply not profitable. We had to restrict them as a customer because there freight is shit. Amazon will even lose money moving there own cargo. Un-like carriers they can try to make up for those loses by charging more else where.
Essentially Amazon working the way it does requires a poor supply chain and lots of sunken cost into DC's and shelf space to accommodate there customer market. They simply can't afford to pay for all the distribution required to keep it running. There only chance is to build there own local cartage carrier capacity in the hopes they can keep cost down.
The problem with the Amazon model is the liability will eat them up eventually unless they start charging more. This is just local cartage, they aren't getting into moving the line-haul cargo so there will be limitations to what they can do directly. This is a win for everyone in the short term. Amazon can keep trying to move there stuff cheaply and we can stop losing money and raising there rates.
In the long term the cost to move a box to someone's home is more than people are willing to pay. Amazon will have to eventually figure out where they can hide that cost in order for them to maintain this cartage program permanently.
Let's see what happens when they start hiring drivers, need capacity they simply can meet, and finally what do they do when the first story comes out where a drug induced driver assaulted a mother of 3. Good luck with that.
The Amazon business model is probably 50 or 60 years a head of its time. If we get to the technological point where we could deliver cargo that doesn't require drivers, trucks or have to follow transportation regulatory laws then maybe they are on to something. Their distribution model would still suck but at least then you could eliminate the required transportation to support it.
1. Operating authority. Their are two kinds of licenses that the government issues for carriers. Carriers for hire (your standard carrier) and Household goods/Personal goods carriers. The reason for this is there are laws that govern tighter restrictions for moving Household goods. There is a 200 year history of people being robbed or abused when it comes to household goods since people have so little leverage vs. commercial customers. Household goods carriers are carrier like Allied Van Lines who move people from one home to another.
Amazon moves a ton of personal/household goods so their is literally not enough capacity for them to deliver those kinds of products. UPS and FedEx are not licensed to move Household goods nor are they going to be doing it anytime soon. Their is too much liability and of course there is issue number 2 below. Ultimately Amazon needs a type of carrier that really doesn't exist today.
2. There is no money is this business. It is a poor business model for carriers to take on Amazon. We move a ton of there shit now and it is simply not profitable. We had to restrict them as a customer because there freight is shit. Amazon will even lose money moving there own cargo. Un-like carriers they can try to make up for those loses by charging more else where.
Essentially Amazon working the way it does requires a poor supply chain and lots of sunken cost into DC's and shelf space to accommodate there customer market. They simply can't afford to pay for all the distribution required to keep it running. There only chance is to build there own local cartage carrier capacity in the hopes they can keep cost down.
The problem with the Amazon model is the liability will eat them up eventually unless they start charging more. This is just local cartage, they aren't getting into moving the line-haul cargo so there will be limitations to what they can do directly. This is a win for everyone in the short term. Amazon can keep trying to move there stuff cheaply and we can stop losing money and raising there rates.
In the long term the cost to move a box to someone's home is more than people are willing to pay. Amazon will have to eventually figure out where they can hide that cost in order for them to maintain this cartage program permanently.
Let's see what happens when they start hiring drivers, need capacity they simply can meet, and finally what do they do when the first story comes out where a drug induced driver assaulted a mother of 3. Good luck with that.
The Amazon business model is probably 50 or 60 years a head of its time. If we get to the technological point where we could deliver cargo that doesn't require drivers, trucks or have to follow transportation regulatory laws then maybe they are on to something. Their distribution model would still suck but at least then you could eliminate the required transportation to support it.