Amazon’s ambition to be a logistics giant is no secret—and it hasn’t been for some time.
Still, logistics activities by Amazon.com (ticker: AMZN) is roiling the trucking space once again on Monday. C.H. Robinson Worldwide (CHRW) and J.B. Hunt Transport Services (JBHT) are the two worst-performing stocks in the S&P 500. The question is why?
The back story. Amazon’s introduction of a trucking brokerage app introduction reinforces risk to freight brokers. That was written by Baird transportation analyst Ben Hartford—in 2017.
But on Monday, Amazon’s entry into the truck brokerage business—which matches shippers with truck drivers—was being cited again as the force dragging down truck brokerage stocks. But that isn’t news (as Hartford’s comment indicates). What’s more, FedEx (FDX) and United Parcel Service (UPS) shares are up today, both posting gains more than the 0.1% move in the Dow Jones Industrial Average.
That doesn’t make sense. FedEx and UPS do more than just brokerage, but they feel the heat from Amazon’s logistics aspirations, too.
And Amazon isn’t the only new entrant in the truck brokerage industry. Don’t forget Uber Technologies (UBER) also has a software platform to connect shippers and truck drivers. Uber is going public soon, but its trucking revenues were disclosed weeks ago when the company filed its registration statement with the Securities and Exchange Commission.
What’s new. If it isn’t the coming brokerage threat, which constantly overhangs the sector, then what is driving down truck brokerage stocks today?
But it isn’t clear that faster shipping matters at all to truck brokers. Last-mile delivery services or cross-country transfers to distribution centers aren’t fundamentally altered by one-day shipping. C.H. Robinson Worldwide wasn’t immediately available to comment on Amazon truck brokerage or one-day shipping impacts.
Looking ahead. The market is always right—over the long term—but it can get in knots over nothing over the short term. Barron’s doesn’t think the market learned anything new on Monday about the truck brokerage industry.
Uber and Amazon may represent more competition for truck brokers, but the existing players are effective operators. Truck brokerage is a necessary, and growing, service that connects the very fragmented world of truck drivers with all the businesses around the country that don’t want to own their own logistics assets.
The bigger risk for the trucking sector is from weak earnings from Hunt. Its stock dropped 5% earlier this month after missing Wall Street earnings expectations because of weak volumes.
Write to Al Root at firstname.lastname@example.org