Amazon.com Inc. is taking its show on the road. Literally.
The online retail giant, No. 1 in the Internet Retailer 2015 Top 500 Guide, bought a fleet of branded semitrailers aimed at making the order fulfillment process more efficient. Those trailers will have Amazon Prime branding on them and essentially will serve as traveling highway billboards in addition to moving merchandise from Amazon distribution centers to facilities where Amazon workers sort parcels before turning them over to the U.S. Postal Service for delivery to consumers. Amazon operates 76 distribution centers in North America, plus 18 sortation centers, according to supply chain consulting firm MWPVL International.
The trailers will not make deliveries to customers and Amazon will not own the trucks that haul the trailers from place to place.
Amazon announced the trailer initiative on Friday at a Chicago event where Amazon employees had packed care packages for U.S. soldiers. Besides confirming that Amazon has purchased “thousands of trailers” that are already in use to move products from distribution centers to sorting centers, Amazon did not provide further comment. A shift toward trucking is a move that was predicted in October by Robert W. Baird & Co. e-commerce analyst Colin Sebastian.
“This is another logical step for Amazon as it seeks to control more of the retail supply chain to and from suppliers and end customers,” Sebastian says. “It can save Amazon time and money to control the shipment of goods rather than depending on third parties. Overall, we expect Amazon to invest in more transportation and logistics to support not only its own retail sales growth, but potentially also as a service to other companies.”
But there’s a key differential between Amazon buying the trailers versus buying the trucks the pull them.
“This means that they are not yet establishing themselves as a trucking company. Therefore, they avoid all of the liability insurance and costs associated with being a trucking company,” says Marc Wulfraat, founder and president of MWPVL International.
Wulfraat says the trailers may serve as “warehouses on wheels” to be positioned near key urban markets and stocked with top-selling products.
“It implies that we could eventually see many hundreds of trailers parked in strategic locations all across America to enable Amazon to get product to the customer within a 60-minute time window,” he says.