Amazon is upgrading its fleet of delivery trucks as it continues to power through the heavy online demands driven by the COVID-19 pandemic. The e-commerce giant ordered more than 2,200 heavy-duty Utilimaster “walk-in” delivery trucks from Shyft Group, a Michigan-based specialty vehicle company, Amazon confirmed to Reuters.
The trucks will be much larger and built to a scale commonly used by Amazon competitors such as FedEx and UPS, both of which are under increasing pressure as the Seattle tech titan comes up with new ways to expand its fulfillment capabilities.
But Amazon has had plenty of pressure on itself to ensure it is fulfilling its one- and two-day deliveries promised to Prime members, who are paying $119 per year for free shipping among other loyalty perks. Orders for food, computers, toys and exercise equipment surged after states issued stay-at-home orders to battle the pandemic, overwhelming Amazon’s network and adding days and even weeks to delivery times.
Consumer demand intensified to such a degree early on during the pandemic that Amazon announced in April it would suspend its upstart “Amazon Shipping” third-party logistics program for non-Amazon packages to prioritize deliveries to Prime customers. Amazon Shipping was available to shippers in a handful of cities including New York, Chicago and Los Angeles. The service was suspended June 5.
Amazon declined to say whether the new fleet would be used to restart that service, which competes directly with UPS and FedEx.
The retail giant has gradually returned to normal operations after inventories and staff shortages but Prime Day, Amazon’s annual discount event typically held in July, has been delayed, though it hosted a fashion summer sale running through the end of July.
Amazon has not indicated when or where the purchased trucks will be deployed. The e-commerce giant reportedly purchased the vehicles last year, and has had them parked for months in locations around the U.S., including in Amazon lots in New Jersey and California. The company has not said why it waited so long to roll out the new fleet.
Drivers familiar with the new vehicles told Reuters they can carry more and bigger packages than the Mercedes-Benz, Fiat Chrysler, and Ford vans that Amazon contractors dispatch around the country. Two drivers, who declined to be named, opted not to switch to the new vehicles because they are heavier and more difficult to maneuver than Amazon vans.
The contractors are part of Amazon’s Delivery Service Partner (DSP) program, which launched in 2018 and is made up of small delivery companies across the country, each with networks of approximately 40 vans. The companies pick up packages from Amazon delivery stations and drop them off at doorsteps, enabling the e-commerce giant to outsource last-mile delivery to hundreds of small businesses and avoid many of the costs associated with employment and vehicle upkeep.
Amazon came under fire last year for failing to properly train drivers who work for its fast-growing network of delivery partners. Multiple news outlets published reports detailing Amazon van accidents that resulted in injuries and deaths.
However, the company has made other moves to expand its e-commerce presence on the road (and in the air). On June 26, Amazon purchased self-driving startup Zoox for nearly $1.2 billion. Earlier that month, Amazon leased 12 Boeing 767-300 converted cargo aircraft from Air Transport Services Group (ATSG), expanding its existing fleet of 70 aircraft to 82.
With Amazon likely feeling the heat from Walmart as the company reportedly is set to debut its Walmart+ membership program this month, the continued investments in its wide fulfillment network will only continue. The company’s first-quarter shipping costs, for example, skyrocketed 49 percent to $10.9 billion amid surging pandemic demand.
The first quarter was more than kind to Amazon in terms of sales, with net revenue jumping 26 percent to $75.5 billion. But it was even better for the prospects of brick-and-mortar-based companies like Walmart and Target, which saw online sales grow by 74 percent and 141 percent respectively as shoppers swarmed to essential goods online at the start of the pandemic. Data from Rakuten Intelligence showed that during the COVID-stricken period, Amazon Prime’s share of U.S. online spend—which hovered around 42 percent at the start of 2020—had dropped to 34 percent by mid-April as many consumers bought from whichever company was in stock.