What Does Amazon’s Acquisition of Whole Foods Means for the Trucking Industry?
Posted by World Trade Distribution
Filed Under: Container Freight
The news that Amazon.com Inc. intends to purchase Whole Foods Market Inc. for $13.7 billion has sent shockwaves through a number of industries, and trucking is among those sectors that could see significant side effects from the merger of the e-commerce giant and the natural foods supermarket. In contrast to the disruptive impact that the deal is expected to have on the consumer packaged goods and grocery industries however, Amazon’s acquisition presents the potential for positive growth throughout the trucking and logistics sectors–with some causes for concern.
Many industry analysts believe that the Amazon-Whole Foods merger will provide opportunities for trucking and logistics companies across the country. Amazon intends to keep operating Whole Foods’ 460 stores, and these locations can act as warehouses and distribution centers for a wide variety of goods that Amazon delivers. Put together, the continued emphasis on the importance of brick-and-mortar stores combined with the expansion of Amazon’s distribution network present the potential for increased demand for trucking and logistics services by the online giant. As the CEO of RLS Logistics, Russell Leo, notes, “For trucking and logistics, I see [the Amazon-Whole Foods merger] as neutral if not a positive impact because Amazon is still showing brick and mortar is still key.”
Additionally, in acquiring Whole Foods, Amazon has gained access to a key resource that they have been lacking up until now: temperature-controlled distribution warehouses. Why is this important? Transporting frozen and refrigerated products has been difficult for Amazon and other major internet retailers. By securing an instant network of these specialized distribution centers, Amazon has created the potential for their entrance into wide-scale distribution of an entirely new type of product–and with this expansion comes an increased need for trucking companies to transport goods.
Of course, Amazon’s purchase of Whole Foods is not without potential cause for concern among those in the trucking and logistics industries. As industry analyst Ben Hartford of Robert W. Baird & Co. points out, Amazon’s “broader logistics ambitions” are still in question, and the internet giant has a long track record of disrupting established business models across a wide range of industries. Opportunities within the transportation industry seem to blossom with this deal, but it is still unclear how Amazon will approach solving its new logistics issues–and if it will do so in a way that benefits or disrupts established companies within the industry.
Taken together, what exactly does all of this mean for trucking and logistics companies throughout the country? In short, it’s still impossible to say for certain. Many trucking companies–and their drivers–could benefit greatly from Amazon’s growing demand for short-haul trucking routes operated between their new network of Whole Foods stores-and-distribution-centers. Moreover, Amazon’s acquisition is just a piece of an overall acceleration in e-commerce sales, which could help boost the trucking industry even more. Still, Amazon’s history of disrupting established industries in surprising ways means that those in the trucking and logistics sector will have to wait and see how opportunities develop–or fizzle.