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Josh Rickards, a truck driver based in Arizona, hauls Amazon loads from time to time.
But the past few months, Rickards hasn’t been working for the Seattle-based megaretailer. Trucking rates have boomed this summer. The last week of August, research firm Cowen saw retailers and manufacturers paying 29% more on average in the spot market — where trucking loads are tendered on-demand, rather than through a contract.
Rickards told Business Insider that he’s been scoring loads with unusually high pay rates, like $6 a mile for a dry van load. And, from his experience, Amazon hasn’t kept up with the uptick in pay.
Amazon’s rapidly-expanding transportation network depends on drivers like Rickards, whose company has only four trucks. But, in recent weeks, some of these small business owners, called owner-operators, are choosing to go into the spot market rather than to continue to work for Amazon.
Amazon is asking the biggest truckers in America for help
That means Amazon has had to look elsewhere for partners in delivering your orders. Executives at three large, public trucking companies told Business Insider that Amazon has significantly increased their demand for truck capacity in recent weeks. All three requested anonymity.
An Amazon spokesperson said the company works with a variety of types of trucking companies, including owner-operators, small and medium-sized trucking companies, and larger firms.
“We work with many small and medium-sized line haul service providers in our transportation network, the majority of which provide dedicated capacity for our network needs, and have long utilized them to carry loads for Amazon,” an Amazon spokesperson told Business Insider.
“We also balance remaining capacity needs within our network by offering carriers of all sizes different contract options so that we can serve Amazon demand, while providing carriers with work to drive their business growth,” the spokesperson said.
Amazon is asking these large public trucking companies for remarkably more trucking services, and is also offering prices that are unusually high for them, the executives said.
“Freight volumes are at record levels, and just like everyone else, they are seeking capacity,” Rickards said.
Retailers like Amazon are looking to replenish inventory that was drained earlier in the coronavirus crisis, when overseas manufacturing and cross-ocean shipping came to a standstill. These companies are also preparing for a holiday shopping season that may start as early as October.
“They need inventory all at once, and that’s whats created such a big capacity crunch,” Cathy Roberson, the founder of research firm Logistics Trends & Insights, told Business Insider. “The trucking industry had a slow period for a while — then, all the sudden, boom.”
Several large trucking companies have been burned by having Amazon as a customer as the retailer does more of its own transportation. Last year, for instance, trucking giant XPO Logisitics had to slash $600 million in expected revenue after Amazon suddenly transitioned to using in-house trucking services.
Amazon has 13,000 truck drivers in its line-haul service network, up from 3,700 in 2018, according to a 2020 report from Amazon. (This network, in which packages are moved …read more
Source:: Business Insider