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The downside of Amazon’s new brokerage pilot program

The downside of Amazon’s new brokerage pilot program

Back in December, Amazon launched a new program that went under the radar. Specifically, it’s a freight brokerage pilot program, and it’s starting out by concentrating in five Northeast states.

Additionally, the program is Amazon analysts claim that this new brokerage plan isn’t aiming to monetize brokerage. Instead, analysts see it as a larger strategy. Specifically, the strategy involves building up a network made up of owner-operators and small carriers. They’ll achieve this by guaranteeing load access for them at pre-determined rates.

The Downsides

First, it’s hard to gather further information on how exactly this program works. It’s unknown how exactly truckers and carriers will be able to gain access to the freight. What is known is that Amazon will be selling the loads to other shippers, even if it’s at a loss.

Furthermore, some outsiders worry that this program may undercut brokers due to its very cheap rates. Amazon has simply brushed off these claims.

An Amazon spokesperson revealed that the program would take place in the states of New York, New Jersey, Pennsylvania, Connecticut, and Maryland to start.

Furthermore, analysts agree that Amazon is doing its best to ensure having enough carriers to fulfill orders during peak business times, such as Halloween and Christmas. Unfortunately, some believe that Amazon is snatching up as many carriers as possible to make it more difficult for competitors to access carriers to fulfill their shipments.

Still, in a statemen to Overdrive, Amazon claimed, “Analysis suggesting dramatic undercutting of pricing is false. We work with many line-haul service providers in our transportation network and have long utilized them to carry loads for Amazon. This service, intended to better utilize our freight network, has been around in various forms for quite some time.”

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