As Walmart and Amazon battle it out to see who will remain atop the U.S. retailer heap, it would appear as though they may be using vendors as unwilling draftees in the fight. Earlier in July it was suggested that Walmart had begun making it known that they may not be as friendly to trucking companies who handle freight for both their operations and their rival’s. If true, what does that mean for trucking?
Walmart has already publicly disclosed its preference that vendors not store any data relating to their business with the superstore retailer on Amazon servers, alleging that such data could be compromised. Yet the company has also denied attempting to influence trucking companies in the same way. According to a Market Watch report, a Walmart spokesperson has said the company knows “it would be illegal for us to tell them who they can do business with.”
The allegations against Walmart were made by trucking company representatives at a recent conference. Those representatives said that Walmart was asking for assurances that they will be able to handle Walmart’s freight volume for the pending 2017 holiday season, indicating they would be less likely to work with vendors that are also carrying loads for Amazon at the same time.
Competition Could Be Good
Both Amazon and Walmart rely heavily on trucking to keep their businesses moving. Amazon has demonstrated a willingness to develop its own logistics division so as not to rely on third-party vendors, but any such efforts have been limited to date. Amazon still relies as much on third-party logistics vendors as their rival.
The question then becomes whether fierce competition between the two would hurt or harm trucking. At C.R. England, one of the nation’s leading refrigerated carriers, they see competition as a good thing. When retail giants like Amazon and Walmart compete with one another at the retail level, they are also competing for the logistic services they need to move their goods. One of the results of competition is more freight at higher rates.
If Walmart does not want its vendors also working for Amazon, it has to be willing to give carriers and truck drivers reason to stick with them instead of splitting their time. The best way to do that is to guarantee a certain volume of freight at a higher price than Amazon is willing to pay. Obviously, the street goes both ways.
Independent contractors probably would not see as much of a benefit as fleet carriers, given that large volume carriers can negotiate better rates, but they would still be able to demand higher rates in exchange for providing their services exclusively to Walmart.
Dedicated Logistics Unlikely
One last thing to consider is whether companies like Amazon and Walmart will ever fully implement their own dedicated logistics divisions. Simply put, probably not. It is one thing to purchase a fleet of vans and hire drivers to make local liveries; it is something entirely different to move freight from coast-to-coast with your own trucks.
Large retailers like Walmart and Amazon have relied on an independent logistics sector for decades because it is the cheapest and most effective way to move their freight. Until those retailers can do the job better and less expensively, nothing will change. So it would appear as though carriers and independent truckers are in the driver’s seat when it comes to determining whose loads they will carry. Walmart can insinuate all they want, but they will have to pay if they want the loyalty of their carriers and truckers.