00:00Amazon has been kind of doing this quietly. A lot of the services that they announced that they're going to
00:05be offering for quite some time, for two or three years now, I guess they're, you know, making an official
00:10push that they're trying to get broader or cast a wider net in terms of the customers that they can
00:16reach.
00:16You know, we would say for the freight transportation world, the sky really isn't falling. Yes, Amazon will be a
00:23competitor, but we expect that the things that they're going to go after might not be the high margin businesses
00:28that the FedExes and the UPSs of the world we're going after.
00:31And it's going to be felt by, you know, freight forwarders such as like companies like Expediters or DSV and
00:38also folks in the warehousing and distribution business like a GXO.
00:45Yeah, but Amazon doesn't just stop there, right? I mean, it may start there and then eventually it's going to
00:50continue building out this logistics business. How long do we think that'll take?
00:57Yeah, so they're already offering these services and what they tend to do is they go into a market because
01:03they want to reduce their costs to serve, their costs to do their core competency, their main businesses, which obviously
01:10is the Amazon.com business.
01:11So what they're trying to do is really take the excess capacity, the expertise that they have that they built
01:18doing things in-house and kind of be able to lower the, like I said, lower the average cost.
01:23How long will it take? I mean, it really depends on what they're going after. We don't think they're like
01:28a huge threat to the less than truckload market.
01:31We think that, you know, for commoditized freight, yes, they can make inroads into the brokerage and freight forwarding businesses.
01:37But, you know, those businesses, it's not just about executing, right? It's about relationships.
01:42It's about being able to provide consistency and quality over time.
01:47And Amazon has to earn some of that business as well. Just because they're in the business doesn't mean people
01:52are going to go to them.
01:53So how does this strategy differ from what they have been doing here?
01:59Because it seems like you do see them, the trucks everywhere. So how has this changed?
02:05Yeah. So, you know, a lot of things that they do for other shippers, it's really kind of on a
02:10non-asset basis.
02:11So those trucks you're seeing, they might own the trailers, but they don't own the truck.
02:14The truck is an independent contractor that maybe their brokerage business secured, or maybe they did it through somebody else.
02:24So, you know, they're going to continue to do that sort of stuff where they're going to say, you know,
02:30to a 3M.
02:313M might have a load to go somewhere and they could broker that load for them.
02:37Or they might, you know, store some of their stuff in their warehouses and, you know, try to get it
02:42to their other distribution warehouses or maybe to the final mile, if you will.
02:48So, you know, they are definitely going to be incrementally encroaching on these transportation and logistic businesses.
02:54But like I mentioned earlier, like they've been kind of doing this for two and three years.
02:58And we just, we expect them to continue to build those businesses.
03:03But like I don't expect to wake up tomorrow and all of a sudden, you know, FedEx and EPS are
03:09at a disadvantage because those companies are going after higher margin business.
03:13You know, they realize that the B2C business, while it's a growing business, is really a low margin business.
03:19And they'd rather grow their B2B.
03:21They'd rather grow into higher margin or verticals like healthcare.
03:24And they're really focusing on the small to mid-sized customers.
03:28And that's probably where Amazon's going to compete with them the most.
03:32So, Lee, given all of that, and thank you for, you know, just kind of talking down people who might
03:37be panicking.
03:38You're looking at FedEx down 9%.
03:40You're looking at UPS down almost 10%.
03:42Is that just an overreaction?
03:45I mean, I would say so.
03:47You know, these names have had somewhat of a decent run as of late.
03:52Maybe UPS, or I should say maybe FedEx more than UPS.
03:58But, you know, I think it's just, yeah, it's really kind of a bit of an overreaction because fundamentally, FedEx
04:08and UPS are no different than they were yesterday.
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