Amazon's "demanding" contracts helped kill a trucking company earlier this week. And on Thursday, one of the truck's giants indicated that Amazon's move to internal deliveries knocked down the bottom line.
Leaders at XPO Logistics, which consisted of UPS to become the top logistics company by revenue in 2017, told investors on Friday that its biggest customer is cutting approx. two-thirds of its business. An XPO spokesperson could not comment on the customer's identity, but four freight analysts identified the customer to Business Insider as Amazon.
The logistics company provides last mile truck, storage and other services to Amazon. The estimated loss of this company frightened XPO's 201
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notes XPO reduced its 2019 forecast, XPO CEO Bradley Jacobs said on a call with investors: "We cannot ignore the fact that our biggest customer is limiting two-thirds of his business to us. We had a lot of capacity dedicated to this Brokerage, last mile and logistics customer, however, we believe that the vast majority of these resources will be redistributed over the next few quarters. "
Greenwich, Connecticut-based XPO has more than 50,000 customers. XPO's largest customer represented about 4-5% of the bottom line, Jacobs said. Now, as it cuts about two-thirds of its service with XPO, the logistics firm's five largest customers will amount to approx. 8% of their total revenue, which amounted to $ 15.3 billion in 2017.
XPO's leading Amazon business took packages from the company and delivered them through the US mail service, otherwise called "post injection", said seaport global analyst Kevin sterling insider. It's a last mile service.
Amazon refused to comment.
Amazon is advancing with internal deliveries faster than expected
The sudden limitation of services with XPO came in December 2018. Sterling said it surprised the logistics fighter.
"It was caught by XPO, little how fast it happened," Sterling said.
Amazon quickly builds up its internal delivery network as shipping bills grow ever larger. It spent DKK 27.6 billion. USD on worldwide freight costs by 2018 and shipping costs increased 23% year-round in Q4 2018.
Read more: UPS CEO David Abney has finally admitted he sees Amazon as a competitor
In 2018, Amazon expanded two-day delivery availability to "almost anywhere" in the United States with its extra Amazon Air capacity. It has capacity for 100 aircraft in its air hub and tens of thousands of brand and trailer trailers. It is even pushed into ocean freight, so it can move its goods from China to the United States without outside interaction.
That everyone saves money for the ecommerce giant – with this model, Amazon pays $ 6 to send a box instead of $ 8 or $ 9, which it would pay to send via UPS or FedEx.
"Amazon makes a wise move here and says," Look, I can build it myself and I have the ability to deliver it myself, "said Joshua Brogan, vice president of Kearney, to Business Insider.