Amazon’s Increased Logistics Presence Ups Industry Ante

E-commerce giant Amazon has been gearing up to significantly increase its logistics presence and leverage the robotics and analytics in its warehouses for its logistics network. This known disruptor, which is one of the largest consumer electronics retailers in the U.S. and the fifth largest worldwide, has the goal of delivering purchases to consumers more quickly and efficiently to keep customers returning.

Amazon also has made strategic investments aimed at increasing the capacity of its multi-faceted global distribution channels. For example, this past March Amazon reached an agreement to operate an air cargo network under which it will lease 20 Boeing 767 freighter planes to enhance U.S. deliveries. It also registered as a non-vessel-operating common carrier for 12 sea lanes, and it purchased an undisclosed number of trailers that it could turn into a “transient” warehousing system by virtue of a patent it was granted in 2014.

Electronics companies that already partner with Amazon may enjoy the benefits of having Amazon join the ranks of logistics companies. Amazon's move to become a fiercer participant within the logistics space may force electronics competitors to enhance their product and service offerings, as well as potentially reduce their prices. Moreover, logistics companies are expected to respond by investing internally or defensively acquiring companies or technologies that would provide them the capabilities necessary to compete.

Stiffer competition means third-party logistics companies (3PLs) are under pressure to expand their service offerings and offer one-stop shop solutions to their manufacturing and supply chain customers. That is essentially transforming 3PLs into fourth-party providers (4PLs) who can provide even more expansive services, and companies within the logistics industry have been working to respond to competitors like Amazon who threaten their business.

For example, Deutsche Post DHL Group is exploring the use of robotics and artificial intelligence in logistics at its Asia-Pacific Innovation Center in Singapore. The company is testing “Mr. Baxter,” a parcel-picking robot programmed to retrieve parcels from warehouse shelves and place them onto a small autonomous vehicle. The vehicle then uses sensors to deliver the assembled parcels to another area of the warehouse. The company is also experimenting with “smart glasses,” which would assist with warehouse order picking, and DHL parcelcopter drones, which can move items within warehouses or handle last minute external deliveries.

Another case of a logistics company aiming to stay competitive is Kewill, a supply chain software provider, which recently agreed to buy LeanLogistics. LeanLogistics provides cloud-based transportation solutions to shippers and has a network of 14,000 carriers across the U.S. and Europe. This acquisition is a perfect example of the trend of industry consolidation aimed at adding and improving services by logistics firms. The acquisition will both bolster Kewill's position as a transportation management systems provider and enable it to expand its product offerings.

Consolidation and competitive maneuverings like these are likely to continue as Amazon continues to flex its logistics muscle.

0 comments on “Amazon’s Increased Logistics Presence Ups Industry Ante

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.