Amazon’s network of branded truck trailers, aircraft, sprinter vans, and ocean freighters means the company can move goods without going to third-party logistics companies. It’s a cost-saver for a company whose delivery costs are “ballooning.”
But it’s not cheery news for the trucking and transportation companies that have generated hundreds of millions of dollars in revenue from moving Amazon goods. XPO Logistics, for instance, announced earlier this year that it would lose $600 million in revenue in 2019 because its largest customer, which they did not name but was identified by insiders as Amazon, was moving logistics services in-house.
Analysts have also warned that UPS and FedEx should be wary of Amazon developing its own third-party logistics service.
Now, J.B. Hunt, which generated $8.6 billion in revenue last year, is the latest transportation giant that’s picked up on Amazon’s logistics aspirations. That’s according to Morgan Stanley’s team of transportation analysts, who recently visited J.B. Hunt’s headquarters in Lowell, Arkansas.
Amazon is a top 10 customer of J.B. Hunt and uses all of its service offerings, according to a Morgan Stanley note to investors sent Thursday. But now that Amazon is developing its own trucking and transportation network, its dependence on J.B. Hunt might suddenly drop.
“Amazon is the elephant in the boardroom,” Morgan Stanley transportation analysts wrote in the note.
On the other hand, J.B. Hunt’s C-suite appears to be comfortable with the idea of Amazon curtailing its dependence on the company’s logistics offerings.
“[J.B. Hunt management] believes Amazon is a company in transformation, like Walmart and Home Depot once were,” Morgan Stanley analysts wrote. “However, J.B. Hunt has more than a decade of relationship with Amazon and understands their customer very well.”
“J.B. Hunt will look to grow with Amazon and other customers but management is acutely aware of changing shipper-carrier dynamics and the potential for not just sudden insourcing but also potentially competing with some of their customers, over time,” they continued.
It’s not just Amazon that J.B. Hunt is monitoring, according to Morgan Stanley’s note. They’re aware that their corporate neighbor Walmart, which is based some 10 miles away also in northwest Arkansas, is moving some of its own transportation services in-house.