In a bid to drive digital growth, the US tech giant has struggled to recruit enough couriers to safely and reliably deliver parcels, which should land Amazon billions.
The world’s most popular online retailer has branched into a range of new businesses and is investing billions on building its Amazon Prime delivery network, according to a recent report in the Wall Street Journal.
Already, the Seattle-based company boasts the world’s largest network of delivery trucks, and has also driven the development of its own shipping containers, testing the idea that their wider range of sizes and materials mean they can serve a multitude of delivery options.
While all of these efforts have helped Amazon reach its lofty goal of reaching 10 billion shipments a year, which equates to more than half of all packages sold in the US, its expansion into other parts of the global economy, such as its bricks-and-mortar retail stores, has been slower than it hoped.
So it is responding by building out its delivery networks and cutting out the middle man — namely couriers. This is already evident in the Amazon contract workers pictured here, who sit behind a truck in a row waiting to get to a city’s airport in an aging van.
While the aforementioned contract workers would appear to be a “carrier” in the eyes of Amazon, their work is actually a peripheral aspect of the company’s cargo vehicles. Indeed, most are carried around by drivers who are also using the vans.
The contracted-for company, New Edge Logistics, usually got around paperwork issues by simply providing Amazon’s customers with maps of where the the vans would travel around the airport before sending out the drivers. The company would also supply the driving skills of the workers too, explained CEO Rick Marchant.
“When Amazon wants someone to pick up packages, New Edge’s big advantage is getting people that have ‘it,’ having drive-time, making money and getting to where they need to go. Amazon would never hire a live truck driver.”
Analysts say Amazon spends $3.4 billion a year on “bulk” delivery costs, covering the cost of storing and ship parcels or “stacking” them on trucks to spend fewer resources delivering parcels to customers.
This “bulk” is two thirds the amount charged to grocery shoppers by the likes of Walmart, but it is also working out to be three times the bill of UPS and FedEx, despite the huge costs of hiring, running and caring for the truckers.
Amazon has its own cash vans, too, to deliver goods more quickly.
And while this information may seem like routine, cartography is absolutely crucial in the shipping industry.
Think the roads look cluttered at rush hour? While the biggest logistics companies in the world could step in and do it quicker than anyone else, the route changes required could potentially be devastating to some roads. And, again, don’t think trucks have to be painted green to be serviceable.
Mountainous areas are known to be particularly difficult for pickups, with inbound transport encountering either abrupt or severe alterations in roads that may cause a loss of time and distance.
Geography is just one of the challenges. Even if Amazon’s vehicles are able to get to a couriers’ job with established routes, getting packages to the recipient’s doorstep is only half the battle. Getting there safely is the most challenging aspect of the problem, leading to far more incidents than the logistics companies handle.
Ever wonder why so many accidents happen at certain times of day? Amazon’s vehicles are forced to take extreme paths on the roads — in particular after midnight and before dawn.
In fact, government-mandated speed restrictions are often not enforced or enforced only minimally when delivering online from the US’s busiest cities — such as New York, Los Angeles and Chicago.
And it’s not just major US cities that have slow streets. Even when traffic speeds are high, the supply of people capable of safely travelling on a busy city’s roads is tiny. In fact, Amazon is only operating in 20% of the US, so it faces challenges no matter where it operates.