Amazon Announces Order of 20,000 Sprinter Vans For Delivery Network

By Richard Meldner

Source: Daimler AG
Amazon confirmed on Wednesday that it is ordering 20,000 Mercedes-Benz vans from Daimler AG to jump-start its delivery program it announced in June.

READ MORE: Amazon Encouraging Entrepreneurs To Start Delivery Business

The announcement of the Amazon order came in conjunction with Daimler AG’s opening of its new manufacturing plant in North Charleston, South Carolina to better supply the second largest market of its popular Sprinter vans.

“We’re proud to partner with Mercedes-Benz Vans to contribute to local economies through the order of Amazon branded Sprinter vans produced at their new plant in North Charleston.

Thanks to the tremendous response to Amazon’s new Delivery Service Partner program, we are excited to increase our original order of branded Sprinter vans to 20,000 vehicles so new small businesses will have access to a customized fleet to power deliveries of Amazon packages.”

Dave Clark, Amazon’s Senior Vice President of Worldwide Operations

This opening order will jump start Amazon’s ambitions to build out its delivery network with local entrepreneurs who will receive financial assistance from the company to acquire the Amazon-branded Sprinter vans.

In a separate statement to the Wall Street Journal, an Amazon representative said the company had received “tens of thousands” of applications for the new program, and will likely select about 500 applicants to start.

The Growth of a Logistics Network

For several years now Amazon has been building out intra-warehouse logistics which includes trucks and air delivery via its Prime Air fleet.

Earlier in the year, the company announced it would be expanding its operations at Cincinnati/Northern Kentucky International Airport by building its own cargo terminal instead of leasing daytime terminal space from DHL.

READ MORE: Amazon to Expand Prime Air Operations at CVG Air Hub

The order of 20,000 delivery vans is not a small number for a company that does not have an existing route-based ground parcel operation.

For comparison, FedEx Ground operates about 60,000 delivery vehicles, which includes OTR trucks, to service the United States and Canada.

Certainly, at the beginning Amazon will focus on urban areas, likely utilizing a similar system as it exists at FedEx Ground where local business owners operate specific delivery routes.

Even with an aggressive expansion plan, it will still take years for Amazon to shift away many deliveries from its current logistics partners such as USPS, UPS, and FedEx.

Especially during the busy holiday season Amazon will need their help to maintain its promised delivery times.

This will create an interesting dilemma for the logistics partners as they still want to work with Amazon to handle their packages, but may also find themselves competing against the online retailer for logistics business.

READ MORE: Amazon to Take on FedEx and UPS with ‘Shipping with Amazon’

As we often have seen with Amazon, they go big and they go bold and the company is willing to take chances to disrupt an industry.

And there is no doubt that this order of 20,000 Sprinter vans will change the U.S. logistics landscape over the next decade.

What do you think about this order of 20,000 Sprinter vans by Amazon? Head over to our Facebook Discussion Group or use the comments section below.

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Senate cancels postal service hearing; Trump’s Amazon crusade delayed

Jeffrey Dastin
4 Min Read

SAN FRANCISCO (Reuters) – A Senate hearing about reforming the U.S. Postal Service that could have scrutinized what Amazon.com Inc (AMZN.O) and others pay for package delivery has been delayed, three sources familiar with the matter told Reuters, moving back President Donald Trump’s effort to hike the world’s largest online retailer’s rates.

Trump has repeatedly attacked Amazon on Twitter for treating the Postal Service as its “delivery boy” by paying less than it should for deliveries and contributing to the service’s $65 billion loss since the global financial crisis of 2007-2009, without presenting evidence.

The president ordered a task force in April to study the Postal Service, an independent establishment of the executive branch of the U.S. government, looking at its financial health and what it charges customers such as Amazon for package deliveries, in a report due Aug. 10.

However, the White House has decided it will not yet release the report, forcing the Senate Committee on Homeland Security and Governmental Affairs to postpone a hearing on postal reform that was planned for Sept. 5, the sources said. One said the hearing was postponed “indefinitely.”

That means any legislation that raised the Postal Service’s rates on Amazon and other shippers has been kicked further into the future.

The task force briefed the president on its preliminary findings and recommendations earlier this month, a spokeswoman for the U.S. Treasury Department, which is in charge of the task force, told Reuters.

“The task force will continue our work to identify solutions to strengthen the USPS business model driving toward a public report before the end of the year,” she said. “It is clear that the governance of USPS must be fixed and we encourage Congress to take actions towards that goal.”

The rates the Postal Service charges Amazon and other bulk customers are not made public. Federal regulators that review contracts made by the service have not raised any issues with the terms of its deal with Amazon.

Trump’s attacks on Amazon have gone hand-in-hand with attacks on its founder and Chief Executive Jeff Bezos, who privately owns the Washington Post, which has published several articles critical of Trump’s campaign and presidency.

Trump has described the newspaper as Amazon’s “chief lobbyist.” The Washington Post’s top editor has said Bezos has no involvement in its news coverage.

The president’s tweets attacking Amazon temporarily knocked down its stock earlier this year on fears that government action prompted by Trump might hurt the company’s profits. The shares have since recovered and Amazon is on track to become only the second U.S. publicly traded company with a stock market value of more than $1 trillion, alongside Apple Inc (AAPL.O).

Amazon did not return a request for comment.  The retailer and cloud-computing firm is only one of several that have attracted Trump’s ire. He attacked Boeing Co (BA.N) over a previous Air Force One deal. Earlier this week, he accused Alphabet Inc (GOOGL.O) subsidiary Google’s search engine of promoting negative news articles and hiding “fair media” coverage of him, without presenting evidence.

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Trump is doubling down on his claims that Amazon uses the US Postal Service as a ‘delivery boy,’

Trump MAGA hat
President Donald Trump dons a red “Make America Great Again” hat
Jae C. Hong/AP Images
  • President Donald Trump doubled down on his claims that Amazon is abusing its relationship with the US Postal Service, saying the company is turning the USPS into a “delivery boy,” in a tweet on Monday.
  • The USPS’ low fixed costs and mandate to deliver mail to Americans makes it an ideal option for “last-mile” delivery, something that has served Amazon well.
  • However, Amazon is far from being the only American company that benefits from the USPS’ current pricing plan.

President Donald Trump is doubling down on his claims that Amazon is abusing its relationship with the US Postal Service.

“The Amazon Washington Post has gone crazy against me ever since they lost the Internet Tax Case in the U.S. Supreme Court two months ago,” Trump tweeted on Monday. “Next up is the U.S. Post Office which they use, at a fraction of real cost, as their ‘delivery boy’ for a BIG percentage of their packages.”

The tweet is part of a months-long battle that Trump has waged against Amazon, focusing on the e-commerce giant’s use of the USPS for deliveries.

In April, Trump ordered the formation of a task force to investigate the USPS and its “unsustainable financial path.” The order stated that the USPS had lost $65 billion since the Great Recession and needed to be “restructured to prevent a taxpayer-funded bailout.”

And when later asked about the issue by reporters, Trump said, “Amazon has the money to pay the fair rate at the post office, which would be much more than they’re paying right now.”

However, Trump is ignoring some key points in his battle with Amazon.

The Post Office’s problems

Trump’s argument isn’t constructed entirely out of thin air.

However, Trump has so far failed to acknowledge that Amazon isn’t the only company that is getting a great deal from the USPS.

“They get a little bit of special treatment, just because they pump in so much of the volume. … It’s really no different than anyone else pumping that much volume into the network,” Logan Purk, an analyst at Edward Jones, told Business Insider earlier this year. “But I don’t think it’s this fleecing that the president thinks it is.”

The Postal Service’s low fixed costs and mandate to deliver mail to Americans makes it an ideal option for “last-mile” delivery, or a package’s journey from a fulfillment depot to its final destination.

Amazon and other companies, like FedEx and UPS, drop off sorted packages, and a postal worker delivers them on their usual route. It’s a unique set-up that allows the USPS to charge lower rates than competitors.

“Similar to public plazas and mass transit, the USPS’ first priority is to serve civilians,” Business Insider’s Leanna Garfield reported. “It’s also notoriously hard for cities and states to not lose money from maintaining subways and publicly owned parks, which is why those services are heavily subsidized by tax dollars and user fares. The USPS does not receive federal money, but Congress still controls the service’s budget and operations.”

Raising prices could hurt American businesses across the board

Any person or business using the USPS to ship packages is getting a better deal than they would get at competitors, thanks to the Postal Service’s unique model.

If Trump’s task force makes the Postal Service raise prices, these costs aren’t only going to impact Amazon — they’re going to impact any business that ships packages. Not only will USPS prices increase, but FedEx and UPS will be able to charge customers and still remain competitive.

Amazon did not immediately return Business Insider’s request for comment on Trump’s latest tweets.

Amazon is a one-of-a-kind company in many ways, but when it comes to saving money due to the USPS’ current price structure, it’s far from unique.

As the company that ships the most goods, Amazon is saving the largest amount of money — but the e-commerce giant also has the funds to deal with an increase. Other companies may not be as fortunate.

 

 

 

 

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