Amazon Opens Up LTL Freight Service Nationwide, Triggering Stock Declines for Major Carriers

According to foreign media reports, Amazon recently announced that it will open its Less-Than-Truckload (LTL) freight service to all businesses outside its own network. This service is part of a new Amazon Supply Chain program and can handle the LTL freight needs of any company, not limited to those previously delivering to Amazon warehouses and fulfillment centers, with coverage across the entire United States.

On the day the news was announced, stock prices of several major freight operators declined. Old Dominion Freight Line's stock fell by over 6%, ArcBest's stock dropped 4%, Saia and XPO Logistics both saw their stocks decline by 5%, and FedEx Freight, which spun off from FedEx and began independent trading earlier this month, fell approximately 3%.

Less-Than-Truckload (LTL) freight refers to a service where a carrier loads goods from multiple customers onto a single trailer, rather than dedicating a full truck to a single customer. Over the past several years, Amazon has been continuously building its own logistics system to reduce reliance on external carriers and support its need for improved delivery speed for its own orders. Currently, Amazon's logistics system includes a proprietary branded air fleet, tens of thousands of delivery vans, and a freight business segment with 80,000 trailers and 24,000 containers.

In a public statement, Amazon's Director of Freight, Jim Ruiz, indicated that platform sellers who have used the LTL service have provided feedback that its technology, visibility, and reliability are highly aligned with their needs, and they expressed a desire to expand its use. The service is now available for destinations across the U.S., serving businesses of all sizes.

In fact, beyond opening up this LTL freight service, Amazon has been steadily making its mature internal logistics services available to external parties, posing a certain level of challenge to existing players in the traditional freight industry. For example, last month Amazon launched an end-to-end supply chain service integrating multiple logistics and freight resources, which led to stock price declines for competitors UPS and FedEx upon the announcement.