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Amazon Effect Pushes Traditional Freight Transport Outside Comfort Zone

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Amazon Effect Pushes Traditional Freight Transport Outside Comfort Zone

Online retail giant Amazon.com, Inc. (NASDAQ: AMZN) has pushed traditional transportation and supply chain management companies to rethink how they facilitate the delivery of freight to businesses and consumers. 

"I think it's amazing what they've been able to do, the disruption that it's been able to create, and I think it's challenged all industries across the board," said Ryan Rogers, chief transformation officer for Covenant Transportation Group (NASDAQ: CVTI), during a discussion about the industry impacts of the "Amazon effect" at FreightWaves LIVE in Chicago on Nov. 12. 

Rogers knows a lot about Amazon, having worked for the company as a transportation executive before joining Covenant in January 2018. Earlier in his career, he also led the brokerage unit at U.S. Xpress.

Matt Waller, dean of the Sam M. Walton College of Business at the University of Arkansas and the author of several books on supply chain management, said the Amazon effect has challenged transportation services providers by pushing more inventory into the supply chain.

"It's had a major impact on transportation and expectations," Rogers said. "What I like about Amazon is the fact that it has pushed us harder to be at the highest service level as possible."

Waller said Amazon is not alone as a supply chain disruptor and there are emerging e-commerce players "nipping at their heels" with new solutions and products.

Rogers called the competition from small e-commerce firms a positive move for both online retail giants like Amazon and freight transportation providers. 

"It's the smaller people that make the larger suppliers have to be more competitive and more innovative and look at their supply chain to see how they can get product there faster and being just as nimble as a small business can be," he said.

Rogers operates his own small online men's apparel company out of his house, which he referred to as a side hobby. "That's what Amazon has done. It's allowed people like myself to find and create a hobby on the side and be able to deliver and compete," he said.

In Rogers' view, the impact of the Amazon effect on supply chains is far from over. 

"When are we going to get to the point where I get on my phone and instead of saying what am I going to need today, why not just ship a box to my house? They probably know what I'm going to need or want. I'd say that's an expectation of what we might see as well," he said.

Image by Jarosław Bialik from Pixabay

Posted-In: AmazonEarnings News Commodities Global Markets Tech General

 

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