“Gig” economy leader signaling it wants more control over supply chain
Over the past few months, Amazon.com, Inc. (NASDAQ: AMZN) has been making moves to take more direct control of its supply chain. Amazon’s recent actions have led many to speculate that it may position itself to offer logistics services to other companies to address its need to scale up its distribution network while managing its unit shipping costs.Here are some of Amazon’s developments:
As Amazon transforms retail commerce from brick and mortar to e-fulfillment, could it also transform logistics? While its scale could definitely impact competition, recent litigation enmeshing the company in the trucking industry’s employment model litigation suggests it still has a ways to go. The recent rash of lawsuits by Amazon Prime drivers accusing the company of wage theft include:
- Amazon has purchased thousands of truck trailers to ship merchandise between its distribution facilities.
- Amazon is negotiating to lease 20 Boeing 767 jets to launch its own air cargo business.
- Amazon China was recently granted a license by the Federal Maritime Commission to operate as a “non-vessel operating common carrier” (NVOCC); in other words, Amazon is now an ocean freight forwarder.
- By being able to provide ocean freight services to other companies for shipments from China to the United States, Amazon will have more control over the shipment of goods.
- Amazon Prime Now couriers in Los Angeles and San Francisco recently sued the company for using their independent contractor status to avoid paying couriers the minimum wage and overtime.
- More recently, Amazon Prime Now couriers in Phoenix, Arizona, sued the company for misclassification alleging they are treated like employees, specifically:
- Reporting to an Amazon facility at a specific time,
- Checking in and out with a dispatcher, and
- Inability to refuse loads.
For a company that has transformed the way many of us shop, it seems that Amazon remains stuck in a business model that creates more financial liability and headaches than the initial attractiveness of low costs might be worth.