Amazon trucking expansion sparks freight stock selloff

Shares of major freight carriers experienced a significant decline on Wednesday following Amazon's announcement of its intentions to expand its trucking services beyond its internal network. The e-commerce giant revealed that it will now provide less-than-truckload (LTL) shipping services to a wider range of businesses, rather than limiting it to those sending goods to its warehouses and fulfillment centers. This initiative is part of Amazon's newly launched Supply Chain Services program, aimed at delivering shipments to any location across the United States. Less-than-truckload shipping allows multiple customers' shipments to be combined on a single trailer, as opposed to requiring a full truckload from a single client. In the wake of this announcement, Old Dominion Freight Line saw its stock drop by over 6%, while shares of ArcBest decreased by 4%. Both Saia and XPO Logistics also faced declines of 5% each, and FedEx Freight, which recently began trading separately after being spun off from FedEx, experienced a roughly 3% dip. Over recent years, Amazon has developed a robust logistics network, significantly decreasing its dependency on external carriers to meet its fast-paced shipping demands. This includes a fleet featuring Amazon-branded cargo planes, tens of thousands of delivery vans, and a burgeoning freight service that boasts 80,000 trailers and 24,000 containers. Jim Ruiz, the director of Amazon Freight, emphasized the positive feedback from Amazon's selling partners regarding their LTL service, noting that the technology, visibility, and reliability met their needs effectively. Ruiz stated, "Now Amazon LTL can move your freight wherever it needs to go, servicing destinations nationwide for businesses of all sizes." This expansion into logistics services for external businesses marks a growing competitive threat to traditional industry players. Just last month, Amazon unveiled an integrated supply chain service combining various logistics and freight solutions into a singular offering, which also contributed to the decline in shares of rival carriers like UPS and FedEx.