Amazon Fuels Growth at Covenant Despite Overall Rough Road for Trucking
America's trucking industry, already struggling with a drop in truck shipments during the first half of 2016, could soon face competition from a behemoth of the logistics industry — Amazon.
The world's biggest e-commerce company is building out its own transportation network by leasing airplanes, buying trucks and even exploring package delivery by drones. But a Chattanooga, Tennessee-based trucking giant, Covenant Transport, says it is benefiting from Amazon's growth in shipments.
Covenant Transportation Group CEO David Parker says he welcomes Amazon's entry into the transportation business to meet the growing volume of shipments from online orders and their often rapid delivery demands.
Covenant ranks No. 43 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.
E-commerce now represents a third of Covenant's shipments and is growing 50% a year, according to Parker.
"No one carrier can handle all of Amazon's freight," Parker told CNBC Aug. 26. "They need every one of our trucks and more so. That's what you've seen in the last few year or so getting into airplanes and actually owning trucks and trailers. We actually welcome that. We need 'em."
E-commerce represents the fastest growing part of the trucking industry, which overall has had a rough year so far with shipments down slightly from last year. At Covenant, freight revenue of $144.4 million this spring was down 5.1% from the same period a year ago.
But Amazon is helping Covenant rebound from the slowdown. Covenant Transport specializes in expedited freight and uses two-drivers in its long-haul trucks to keep the rigs rolling 22 hours a day to meet Amazon's tight delivery deadlines.
Last year, Amazon shipped about 1 billion packages and is projected to do far more this year, CNBC reported Aug. 26.
