How Logistics Is Proving that Amazon Needs to Be Regulated

Zvi Schreiber

A version of this article originally appeared on

A few days ago, Amazon announced one day delivery plans. In itself, that’s a big deal, but its significance is compounded when you consider the trucking shipment volumes such a move will require; it’s essentially jet fuel for their new freight brokerage business. Take into account their FBA warehouse footprint, NVOCC license, and SEC reports flagging forwarders as competition, and you have a solid reminder that Amazon is coming for global freight.

It’s also not hard to anticipate where the company is going. Twenty years in, Amazon’s modus operandi is clear. They build internal tools and then offer them as a service – just like Amazon warehouses were first used for their inventory and then opened up for FBA sellers, trucking will go the same way. It’s still internal, so rates are incredibly low – up to 30% below market. But that could change on a dime, if Amazon starts to offer trucking as a service. Here, with a huge network, ecommerce customer dominance, and copious shipment volume, it seems that Amazon’s supply chain creep should raise a flag.

Regulating Amazon…Because Freight

Elizabeth Warren recently made waves when calling for increased Amazon regulation. From a logistics perspective, I think she’s on to something.

Amazon delivers amazing value to customers and dominates the market. Its snowball of success has relied on expanding from one market to the next, leveraging market dominance to penetrate new markets. In this flywheel of success, things get murky.

While delivering value, Amazon is becoming dominant in more key markets than any one company should be. It’s also edging closer and closer to an anti-competitive practice called tying. Of course, as many have pointed out, they’re not a monopoly. Yet. It accounts for “only” 5% of US retail and less in other countries. It’s only the third place retailer in the US. Hardly the stuff of antitrust suits.

The Logistics of Dominance

It’s far more complicated than that, though. Amazon accounts for over 100% of US retail shareholder value growth, growing in value more than everyone else shrinks. This has set it on an unstoppable path as the dominoes fall into place. Online sales built up a huge customer base. This attracted millions of sellers, each of whom pays 6% to 51% of their revenue to sell on Amazon. Crucially, businesses need to be there; after all, over half of American households shop there.

This success made way for logistics.

Having opened its virtual shelves to third parties, Amazon opened its warehouse, allowing retailers to outsource storage, pick-and-pack, and last-mile delivery to, through a program called Fulfilled by Amazon (FBA).

FBA is expensive but retailers are forced to use it to reach buyers. Fees are complicated but as an indication, FBA storage costs $0.48 to $2.40 per cubic foot per month while FedEx charges $0.19. That “Prime” shipping label shouts loudly and, while some users can qualify for Seller-Fulfilled Prime, experts agree that using Amazon Prime fulfillment is the best way to secure the elusive Buy Box (the seller that Amazon defaults to in checkout).

And so, Amazon is taking its dominance from retail to marketplace to fulfillment logistics. And now it’s going further into shipping, using its advantages to offer freight and shipping.

Enter Global Logistics

For retailers, getting Amazon products from suppliers in China to the Amazon fulfillment center is increasingly happening through Amazon. And once it arrives in the US, using Amazon Global Logistics, of course. As of last week you can book the truck using Amazon Freight. At every step, the seller is getting more affordable prices (volume does that) or better access, while the customer gets more products, faster.

For businesses intent on growing their business on Amazon, FBA becomes a near-default. And for getting goods to FBA warehouses, it’s likely that Global Logistics will become the default.

Amazon is doing everything right.

The tendency to dominate and then creep that dominance outwards creates a force that should be addressed.

We welcome Amazon. I have a Prime subscription and a sizeable swatch of companies buying freight services via are Amazon sellers using FBA. But even as a company and individual that benefits, I’m a firm believer that Amazon regulation is critical to ensure fair competition. If that doesn’t come, Amazon as a logistics force will increase. As their private label brands grow, as their global supply chain control increases, and as customers get more and more bought in to their level of service, it will be difficult to turn this ship around.

Zvi Schreiber is the CEO and founder of the Freightos Group, which includes the Freightos Marketplace, WebCargo, and the Freightos Baltic Index.

Zvi Schreiber

CEO, Freightos Group

Zvi Schreiber is a serial tech entrepreneur and the founder and CEO of Freightos. He was previously the CEO of Lightech (acquired by GE) and Unicorn (acquired by IBM). Schreiber holds a PhD in computer science and is the author of Fizz, a novel about the history of physics, and Money, Going out of Style. He is a frequent speaker at industry events and has authored various articles, papers, and patents.

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