Updated: Aug 7, 2021
It's a good bet that Bob Dylan did not have the logistics industry in mind when he wrote "The Times They Are a-Changin" back in the 60's... but the parallels between his lyrics about the societal shift from the "old to the new" is uncannily relevant today to the shift we're seeing in the logistics industry...
"Come gather round people, wherever
you roam and admit that the waters around you have grown".
The vision of an Amazon delivery convoy (taken by my wife) as we passed them one morning on a stretch of Interstate 495 in New York known as "The Long Island Expressway", made a "statement" that the "waters around us have grown" substantially over the past few years.
So why is this important? Well, just a few years ago the only AM convoys you would likely see on the LIE or the 401 in Canada on a weekday morning would be those of UPS and FedEx... and perhaps those of a few regional parcel delivery carriers. The visual "statement" these Amazon vans made of the monumental shift in the logistics industry while at first glance seems routine, is revolutionary... after all, just 5 odd years ago they didn't even exist, and many shippers were hoping that a third competitor to North America's two leading commercial parcel delivery companies (USPS & CPC aside) would emerge to mitigate the rising cost of Parcel delivery across North America.
Well, that third player hasn't just arrived, but has exploded onto the logistics scene, and they're changing the competitive landscape in a way that rivals the impact FedEx had on the logistics industry throughout the 70's & 80"s. Not just changing how packages are delivered but eclipsing their competitor’s business models by moving up the Supply Chain by fulfilling orders through the world’s pre-eminent ecommerce order fulfillment platform. Something that UPS and FedEx are striving to address through acquisitions.
And they are not just changing the "method" of fulfilling orders, but customer expectations. Surveys we conducted of customers just a few years ago who regularly purchased merchandise online revealed that they would sacrifice delivery speed for price and a consistent, reliable delivery. Unlike their logistics competitors, however, Amazon doesn't need to make all its profit from delivery of parcels. They can afford to offer delivery speed and lower pricing as they generate most of their revenue from the sale of merchandise on their platforms. So much so, that today customers expect not just two or three day delivery of parcels ordered online, but next day and even same day delivery in some markets... and they get it!
To widen this gap in competitive advantage, Amazon is now investing in aircraft and a regional air and ground national hub network to cover the long and expensive cross continent middle mile line haul of product from North American ports of entry to their regional Distribution Centers. They already own and operate 100 aircraft and have the rights to purchase many more... and they will add to these as their volume grows.
In short, while I wouldn't count out UPS, FedEx and other major parcel carriers just yet, Amazon is forcing a change in both the logistics industry and in customer expectations that has and will continue to change the logistics industry forever... a change similar to the societal change Dylan's song verse predicted 50 odd years ago:
"The slow one now will later be fast.... the order is rapidly fading.
And the first one will later be last. For times, they are a-changin".
For help in mitigating the shift in parcel and freight delivery and expense to your business, contact us at:
LDK Global Logistics