Markets

Amazon Upgrading From Delivery Vans to Box Trucks to Meet Prime Demand

Amazon (NASDAQ: AMZN) is stepping up to bigger delivery trucks to meet the now-higher demand for Prime orders. Drivers for the e-commerce giant's delivery service were recently seen in the large box-type trucks often used by FedEx (NYSE: FDX) and UPS, rather than the vans that it usually deploys.

Reuters reports Amazon ordered 2,200 Utilimaster trucks last year from specialty truck manufacturer The Shyft Group (NASDAQ: SHYF), but had not deployed them until recently. 

Woman delivering an Amazon Prime package

Image source: Amazon.com.

A bumpy road 

In terms of the number of vehicles, the Utilimaster purchase pales in comparison to the 20,000 or so Mercedes-Benz Sprinter vans Amazon bought two years ago as it sought to develop a delivery fleet that could help it sever its dependence upon FedEx and UPS. But those Utilimaster trucks can hold much more cargo than the vans.

After years of denial, FedEx has increasingly admitted it now views Amazon as a competitor, and last year, it dropped several delivery options for the e-commerce retailer's packages, including ground delivery.

But Amazon's transition into being (in addition to everything else it is) a transportation and logistics operator got much bumpier as the coronavirus pandemic swelled the e-commerce sites orders, which caused some delivery times to expand to several weeks instead of the one- or two-day durations to which Prime members had become accustomed.

Amazon even suspended its third-party delivery operations so it could focus on its own orders. But that benefited competitors like Walmart as customers sought alternative online shopping options.

Although it's unknown if Amazon plans to use the new, heavy-duty walk-in style trucks to relaunch its third-party delivery service anytime soon, Reuters reports that the drivers of the Utilimasters are receiving special training to operate them. Amazon had been criticized in the past for failing to sufficiently train its van drivers prior to putting them on the road. Those employees now must undergo two days of classroom instruction and two days of ride-along training with an experienced driver before being sent out solo.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and FedEx and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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