00:00:00
Speaker 1: Hi everyone, this is Lee Klaskow and we're Talking Transports. Welcome to Bloomberg Intelligence Talking Transports podcast. I'm your host, Lee Klaskow, Senior Freight Transportation Logistics Analyst at Bloomberg Intelligence, Bloomberg's in-house research arm. Before we dive in, quick favor, if you enjoy the podcast, please subscribe, rate, and review, and share it with a friend. Your support helps us continue bringing you conversations with leaders shaping the future of transportation and logistics. And if you'd like to connect, you can always find me on the Bloomberg terminal on LinkedIn or on X at Logistics Lee. Today, we're coming to you from Bloomberg's global headquarters in New York City. Few companies have had a bigger impact on transportation and logistics over the past decade than Amazon. What began as an effort to deliver packages to customers faster and has grown into one of the world's most sophisticated supply chain networks. And now Amazon is making those capabilities available to businesses beyond its own marketplace through Amazon Supply Chain Services. Joining us in the Bloomberg studio is Peter Larson, head of Amazon Supply Chain Services. Today, we'll discuss Amazon's long-term logistics strategy, where it sees the biggest growth opportunities across transportation, warehousing, and supply chain services, how AI is transforming logistics, and how Amazon positions itself alongside many of the industry's legacy transportation providers. Peter, welcome to Talking Transports. It's great to have you here in New York.
00:01:36
Speaker 2: Thanks very much, Lee. I am happy to be here.
00:01:39
Speaker 1: So, you know, what is Amazon Supply Chain Services and kind of what are the problems you're trying to solve?
00:01:46
Speaker 2: Well, we, as you may know, Amazon's a technology company, fundamentally. that just happened to build one of the world's most sophisticated supply chains. And we first built it for ourselves. And then we opened it up to the sellers who sell on Amazon. And we proved it at scale. We've got hundreds of thousands of Amazon sellers using it. And so just recently this year, we opened it up so that any business of any type can use it. It's a little bit like the playbook we ran with AWS a number of years ago. Build it for ourselves and then open it up for everybody to use.
00:02:24
Speaker 1: And at what point was the decision made, you know, whether it's we have the scale or we have the ability to say, let's open it up to third parties outside of your marketplace?
00:02:36
Speaker 2: Yeah. Well, there were a couple interesting inflections in the journey. Actually, a number of interesting points in the journey. But, you know, I'll tell you where a lot of this got started is that Amazon's been building its own fulfillment centers for, you know, since we got going, really. Right. But it was in sort of 2013, the holiday season, where, you know, we were using a lot of third party transportation companies for the last mile delivery. And one of those companies just fell over from unexpected demand. And that meant that we shipped a lot of packages late to prime members. So at that point we decided, well, you know what, in addition to the fulfillment centers, we need to build our middle mile and last mile transportation networks as well. So we set off doing that. Once we got that up and running for ourselves, you know, a big part of the amazon.com business is third-party sellers. And so we opened up that logistics network to our Sellers, otherwise known as FBA or Fulfillment by Amazon, that took off. Sellers were really able to grow their businesses using that service. And that service is where they store their inventory in our warehouses and we pick back and ship it on their behalf for their orders on Amazon. Those same sellers then turned to us and said, listen, we already have your inventory in the Amazon network for our Amazon sales. How about you just let us use that same inventory for our off Amazon channels as well? So we open it up to our Amazon sellers for their off Amazon, whether they sell it on their own direct to consumer sites or another retailer outside of Amazon. Once we did that, we had hundreds and thousands of those sellers using our supply chain services for their off Amazon volume. We decided, well, heck, why not open it up actually to any business of any sort? And so now we're offering it for ourselves, for Amazon sellers, as well as for any company out there.
00:04:42
Speaker 1: So Amazon supply chain services, we're just going to call it ASCS going forward because we only have 40 minutes.
00:04:48
Speaker 2: Yes.
00:04:50
Speaker 1: So, because I'm sure we're going to say it a lot, you know, outside of fulfillment, you know, a lot of folks that are listening, they know that, you know, they get an Amazon package on their doorstep. They know that part of the delivery, but you guys are offering more services beyond just the final mile. Uh, can you just talk about, you know, what markets you're in?
00:05:08
Speaker 2: Yeah. Let me set it up at a high level. So we've built, um, an end to end supply chain, really. So all the way from pick it up from the manufacturer in China, put it on a boat over the ocean, get it through customs, pick it up outside of customs, uh, with a, um, with a freight truck. Take it from that point either to a customer's warehouse or to one of our warehouses. Once it's in our warehouses, you got two options. If it's a consumer order, we can pick back and ship that on your behalf. If it happens to be you want to distribute your pallets to other downstream retailers or partners, we can pick and pack essentially pallets for you as well.
00:05:56
Speaker 1: Mm-hmm.
00:05:57
Speaker 2: And then the last option is if you want to get it over the ocean, for example, put it on our freight trucks and send it to one of your warehouses, you can easily do that. And then if you want to hire our parcel shipping to go to your warehouse to pick up the good that you need sent to your end customer, we can do that as well. So we've got multimodal freight, air, ground, rail, and ocean shipping. We've got distribution and fulfillment, and we've got parcel shipping.
00:06:29
Speaker 1: And so you do truckload, less than truckload. You have freight brokers and freight forwarders and all that.
00:06:35
Speaker 2: We got it. We got it all. You know, I mean, of course, we have a lot of work left to do, but many people don't know, for example, that we're one of the largest freight forwarders that ships containers from China over to North America and Europe. Right. Little known fact, we are one of the largest freight forwarders in the world. Also, little known fact, we have a well-established air cargo network as well, both domestically in the States, but also increasingly from outside the States into the States. So, for example, we run a lot of lanes from Latin America to the U.S. for goods, for example, for Mother's Day, for flowers or for Valentine's Day flowers. cherries from Chile, things that are created outside the U.S. but have to get in really quickly because they're perishable, we use our air cargo network for that.
00:07:35
Speaker 1: And what's the value proposition you guys provide to third-party shippers that are outside your network? Like, why would, if I'm a shipper, why would I use Amazon versus DSV as a freight forwarder or J.B. Hunt in trucking or C.H. Robinson in the brokerage business or you know, recently there's been a lot of news about you guys entering the LTL market. Uh, so every time there's an announcement hits the, the tape, the old, the LTL stocks get, uh, get hit pretty hard. Um, so, you know, what, what's when you, when you guys are selling your services outside of your own, um, marketplace, what, what is that value proposition?
00:08:12
Speaker 2: Well, I think, um, the first thing that we talk about with customers is the benefit of having that end to end network. Um, A lot of our customers have built up their supply chains over years, and they've got five or 10 different fragmented firms that they're working with. And what that means is you've got missed handoffs and visibility gaps in your supply chain. And, you know, it's such a connected system. Any sort of a visibility gap or when there's a problem, any sort of finger pointing is can really have an impact to our customer supply chain. So the first thing that we're providing is really an end to end system that provides visibility throughout. Second thing is that, you know, any disruption that hits in the world, you can be pretty sure that it's hitting Amazon at that same time. So we have built our network over the years to be resilient and Anything that happens, whether it's weather or a political issue or sort of a war, what have you, we have to deal with it for ourselves. And therefore, you get the benefit of our decades of work to proactively adjust to those disruptions so that they don't affect your end customer. Third thing that we talk about is, you know, we build for a peak that is higher than I dare say most others peaks are. So we're investing a considerable amount in our supply chain every year. And we do that because we've got the volume from Amazon.com to support that. So if you have demand spikes here, unlikely to outstrip our capacity. And at any given point, just because we build for a very large peak. And then additionally, we've got over a million robots, for example, in our facilities around the world. It's a lot of investment and, you know, a lot of time that goes into that deployment. Our ASCS customers get the benefit of all that investment we're making for Amazon. It just flows downstream to them and they get it, you know, effectively at a marginal cost. Right.
00:10:31
Speaker 1: And obviously, you know, Amazon's a tech company, but you're obviously a retailer as well. You know, I get it probably either a box or an envelope from Amazon every day at my house.
00:10:42
Speaker 2: Thank you, sir.
00:10:43
Speaker 1: You can thank my family. They're the ones that are doing most of the buying.
00:10:47
Speaker 2: We're in the same boat in my house, believe me.
00:10:50
Speaker 1: But, you know, we love the convenience. But that being that said, are there certain markets where it's tough for you to enter? Because I would imagine a competitor like a Walmart, for example, might not want to leverage you for their LTL freight because, you know, you're competitors. They don't want to necessarily.
00:11:10
Speaker 2: Give you the business.
00:11:11
Speaker 1: Are there markets like that where you're having problems? kind of getting more of a footing because of that competitive nature with other shippers?
00:11:21
Speaker 2: Well, I'm not sure we see a ton of that per se. Like we do, for example, distribute packages based off of Walmart orders or TikTok orders or Sheen orders, you know, pretty much name any marketplace in the book. And if you use Amazon supply chain services, we can fulfill for those marketplaces. You know, I will say that there are certain segments of customers that we're still chipping away at. You know, Amazon does really well at goods that sell on Amazon. Now, the good news there is that we've got over 400 million SKUs on Amazon. So that basket of goods we sell is actually very broad, much, much broader than most people think, but it's not everything. And so you might get some customers who are, um, interested in specialized services, for example, cold chain with GLP right now, booming for obvious reasons. You know, we're, we're, you know, we do a lot of that work in our grocery business and our pharmacy business, but in our sort of core mainline logistics network, we're still working on things like, uh, cold chain, transportation. Those are, you know, those are some examples of places we're still working at to try to.
00:12:46
Speaker 1: And in the same, like, frenemies vein, you know, obviously, given your size, you're a huge purchaser of transportation, even though you're doing a lot of stuff in-house. You know, how do you view companies like DHL or DSV or C.H. Robinson or EPS or J.B. Hunt, for that matter, you know, as competitors, partners, both? Like, how does that relationship work? Because because we've seen UPS kind of glide down their exposure to Amazon over the years. Um, you know, how do you see that relationship going?
00:13:13
Speaker 2: Yeah, we, we, you know, um, the, the logistics market needless to say is, is, is giant and it's growing. And so, you know, we don't really see it as a zero sum game where, you know, we're trying to add new capabilities, uh, for customers rather than sort of take share away from competitors. Um, One of the things that Amazon.com has driven is what I like to think of as a secular change in speed expectations. And so, you know, because we have the prime program and we've just been getting faster and faster and more reliable each year on those last mile shipments, we've had to build our entire network around that speed and certainty. That then increases expectations of Customers who shop outside of Amazon, they're like, well, why can't I get it in one or two days? And why doesn't it arrive when you say it will, just like I do on Amazon? That's a part of the logistics market segment that we're really helping to drive, which we think raises all boats.
00:14:18
Speaker 1: So, you know, in transportation, the stuff that you guys do, you tend to have like an asset light or a non-asset model where you use a lot of third party capacity to do the movement of freight. are there any markets where maybe that model doesn't necessarily work if you truly want to be more of a competitor? Like the LTL space, for example, you know, cross-stock facilities are very important for LTL. They need to be strategically placed across the country. You know, you guys, from what I understand, and please correct me if I'm wrong, you guys are doing most of the movements like from your fulfillment centers when you're consolidating freight. So can you talk about like You know, does Amazon have plans maybe to take more of an asset-based approach to any of these modes of transportation?
00:15:09
Speaker 2: Well, I think it's a mix, honestly, Lee. You know, if you look at any one of our modes, we have a mix of owned assets and third-party assets. And that goes across the, you know, across the chain. The truth of the matter is at our scale, it's very, very hard to... own 100% of the assets yourself. It's just too hard to execute on that. And then similarly, you don't want to be all third party because then you lose a sense of ownership and control over the customer experience, which is really important to us. So across the board, really, it's a mix for us. The thing we do is we use technology to make... Ourselves and our customers relatively agnostic on whether it's a first party asset or a third party asset. Our network operators, in fact, usually don't even know if it's our asset or a third party asset because they're using the same set of technology tools to run the network. And that works pretty well for us.
00:16:23
Speaker 1: And so for ASCS, where do you see the greatest opportunities? Is it the domestic transportation market here in the U.S. or is it outside of the U.S.? Well.
00:16:35
Speaker 2: So first off, ASCS is growing really, really well, I think. And the thing that I've sort of learned over the past few months here is that, you know, there's not a demand, you know, there's plenty of demand. Folks are really interested in having sort of an alternative out there with an end to end supply chain for them to be able to use. They just like the competitive dynamic in the market. They also just like the customer obsession that Amazon brings to it. Like we've been doing it for ourselves for years and they like our attention to detail and our high bar there. I will say that the sort of the non-U.S. market is a huge area of opportunity. You know, there are some things that we've had time to mature in the States that that are a little bit less mature, uh, if you go outside the States, for example, that end to end visibility and, uh, disruption, uh, management, um, those things we've got pretty well tuned here in the States. And as you go outside the States, we have some really nice opportunity for improvement there. Uh, we also, uh, just because outside the, you know, outside the States, most countries just aren't as large. And so it's, definitionally a little bit more fragmented outside the US. So our technology binding, so to speak, can really play a good role in getting rid of the fragmentation a lot of customers have to deal with on a daily basis and just making it look like one easy to use network. Here's one quick example. Over in the EU, for example, as a customer, you can store your inventory in one of our warehouses, let's say in Germany, but you can actually fulfill across 20, I think it's 27, 26 EU states from that one pool of inventory in Germany. And that's seamless to the end customer. You don't have to have your inventory in 26 different spots. You can have it in one. Gotcha.
00:18:34
Speaker 1: And so looking here in the domestic market, where do you guys see the most growth for ASCS? Is it the LTL side? Is it the freight brokerage side? Is it forwarding?
00:18:45
Speaker 2: Is it fulfillment?
00:18:46
Speaker 1: Where is the growth for the organization?
00:18:49
Speaker 2: Yeah. Well... I'll tell you, all of the modes are growing very nicely. I'll say that our partial shipping business is cooking with gas, as one of my former bosses used to say. That's growing really, really quickly. And I think it's because the same last mile network that does the delivery to end customers for Amazon is now doing it for business of all shapes and sizes. So you get the same speed, same delivery. same resilience. You get the little maps that show up on your phone that show where it is. I think those are.
00:19:26
Speaker 1: And your cost to serve is lower than the legacy players.
00:19:29
Speaker 2: Cost to serve is strong as well. We like to think of it as we deliver the most value per dollar spent. You know, we are unlikely to ever be the sort of the cheapest alternative out there. That's just not how we think about it. We want to provide the most services per dollar of anybody else. Um, So you don't really use us if you want like the cheapest and the slowest. You use us if you want the best service, which then can hopefully grow your overall business. Because, you know, we said Amazon, if there's one thing we've learned over the past 25 years or so is that supply chain is actually a growth driver, not just a cost center.
00:20:08
Speaker 1: And so, you know, obviously within Amazon's DNA, you're a technology company that happens to do other things and do them quite well. There's been a huge conversation about how AI is going to be disrupting the supply chain and logistics industries. Can you talk about, you know, how Amazon is using AI within its supply chain and kind of where you see the benefits and where you see that going going forward?
00:20:34
Speaker 2: Yeah, we've been using AI for a number of years, of course, beginning really with machine learning. And now it's moving as quickly as I've ever seen any technology transition into large language model and agents. The things that have been working for a number of years for us with regards to AI, the first is disruption management. which is something happens in the world and we need to reroute our network. All that's been happening automatically for a number of years. Second thing, a place where we have a heavy use of AI is in inventory placement. We have over 400 million SKUs, as I said a little bit earlier, for sale on Amazon.com. And we have to forecast placement for that inventory on an almost real-time basis. And that really matters these days, particularly for our ASCS customers, because they're not just selling on Amazon. They're also selling on marketplaces like TikTok, for example. And they can have real demand spikes on TikTok. And they need to make sure that their inventory is in the right warehouse to fulfill that demand. Our AI inventory placement algorithms are behind a lot of that placement for us. I think that the trend, of course, along with everybody, is to move to not only detection and monitoring, but then following on to action. If I am using AI to figure out where inventory needs to be in the network and I don't have enough in a particular location, right now a human being has to step in and make that inventory transfer. Very, very shortly, agents are going to be making that inventory transfer. And the human beings are going to be more focused on strategy and scenario planning.
00:22:52
Speaker 1: Okay. And as leading ASCS in your seat, is there a technology that you're really excited about, whether it's, you know, automation or autonomous trucking or, you know, developments in AI that you really think are going to, you know, benefit your supply chains?
00:23:13
Speaker 2: Well, the two that come to mind immediately is, you know, I do think AI is going to make our sustainability program even more effective. Getting a package from place A to place B in the shortest, most efficient route in the face of disruptions, I think we're going to save a lot of miles on the road and a lot of miles in the air because of AI because of that, and the world will be better off for it. I think the second thing is robotics. As I said a little bit earlier, we've got over a million robots deployed in our networks today. And the pace of improvement of what those robots can do is amazing, quite frankly. And we have moved from moving pallets of things across warehouses within a divine zone for the robots to picking and packing with arms or robots that can move throughout the warehouse intermingled with our associates at a very high rate. And I think that is going to keep accelerating over the next few years here. That's important because all of that both improves safety, but it also lets us get more demand over through the same network. And that, of course, decreases variable costs. We can pass those lower costs on to our ASCS customers.
00:24:51
Speaker 1: So we're in an environment right now where air freight rates are relatively high, container rates are relatively high, trucking markets here in the U.S. are seeing rates increasing. How is that impacting ASCS? And, you know, while obviously higher rates might hurt Amazon's margins, but do they benefit? Do you have your own operating margins where you're trying to operate as a profit?
00:25:19
Speaker 2: Yeah, we're being hit with higher costs, particularly for freight and trucking, just like everybody else is, quite frankly. And there are the fuel costs that we have to absorb. And then there are some new regulations in place that that mean that there are fewer truck drivers available, and that also increases costs over time. So we're having to deal with those on a daily basis. That was not the increase in trucking costs. We had models that forecasted what we thought the supply cost was going to do this year, We did not anticipate the rate at which costs increase this year. So we've had to work hard to make sure that those increased costs don't show up to our customers.
00:26:14
Speaker 1: Yeah, spot trucking rates are up around like 30%, 35%, excluding fuel surcharges. And then contractual rates are up, call it 9% to 10% year over year. So they're definitely moving higher. And given that, so are you guys using intermodal more? Do you use intermodal? Is that part of your strategy?
00:26:30
Speaker 2: Yeah, we do. We've had an intermodal mode for a number of years. And as you can expect, as trucking costs go up, we're shifting more and more of our volume to intermodal. One of the things we're doing is we're working with the railway companies so that they adopt our technology. so that things can move faster with higher visibility throughout the intermodal network. Nirvana would be we can put a lot of stuff on trains, and they get there just as fast and just as reliably as they do on trucks. We've got a little ways to go, but we're making some good strides with our partners there.
00:27:14
Speaker 1: Do you have a one-rail partner that you're using predominantly in the west and one in the east, or are you kind of agnostic?
00:27:20
Speaker 2: It's a mix. Uh, we, you know, we use most of the, you know, again, at our scale, uh, you know, we use most of the, um, available supply that's out there. It's, it's, it's highly likely that we're using them in one form or another.
00:27:33
Speaker 1: So if there's one thing that you could do for Amazon to make its supply chain more efficient today, what, what, what would it be?
00:27:42
Speaker 2: That's a great question. I think, uh, There are a couple of things that we're working on, I guess, that I think come to mind first and foremost. First of all, there's just the infusion of AI across every aspect of our operation. And that continues on a daily basis. Second thing is, you know, some of the aspects of our services that have worked really well for Amazon, it turns out that when we're servicing Amazon, Non-Amazon sellers, we need to sort of adjust our operating a bit to meet their needs. Here's a case in point. Our whole network is built off of speed. And so we frequently will arrive at pickups or drop-offs. Let's just say it's freight or it could be parcels. Now, you know, in a lot of, in most cases, dare I say it in the world, you know, early is good or early is okay. In the logistics business, it turns out that, of course, if we're too early, you know, the doctor might not be available. The personnel might not be available. So we've had to tighten up our technology controls to make sure that our drivers don't show up too early. That's an example of the kinds of adjustments we're having to make to our network on a daily basis to make sure it not only works well for Amazon volume, but also for off Amazon volume as well.
00:29:14
Speaker 1: And, you know, are there things that customers are asking you today that they weren't asking for a couple of years ago, whether it's services or performance measurements?
00:29:26
Speaker 2: Yeah. Well, a couple of things that come to mind there is, I talked a little earlier about they just continue to want an end-to-end seamless network. They really would love the convenience of having one partner that can service most of their volume across modes. As I said earlier, many customers are using a fragmented supply chain and that just makes things much more complicated and it increases costs. And so we continue to knit our services together in a way that makes it really easy for our customers both to use and to get visibility on. And that increases ease of use, but it also decreases costs. That's one area. Another area that they are increasingly asking for is help me take advantage of international markets. Right now it's hard or it's relatively hard to, Let's say that you sell stuff in the U.S. and you want to start to sell stuff outside of the U.S. That's a complicated process, and we're trying to make that easier and easier for sellers. Because we do it for Amazon.com, we can externalize a lot of those capabilities for our non-Amazon customers as well to make it easy for them to expand across the world. I think a third thing I mentioned a little bit earlier is that They basically want AI not only to do things reactively, but proactively as well. So don't only detect what's going on out there, but also action it. That just, for the most part, that's going to decrease the amount of work that they have to do on their end. And their staff can then really only have to deal with the exceptional disruptions. generally supply chain is call it 60% of most of our customers' cost bases. You know, anything you can do to make that a little bit more simple and proactive is going to be a good thing for their businesses.
00:31:41
Speaker 1: And so has your strategy in the past been to grow all these services organic, or have you guys gone out and bought like a freight forwarder or a freight broker to, you know, enhance a certain part of the market that maybe you're not in, whether that is from a you know, a lot of like freight forwarders will buy another freight forwarder, a different country where they don't have exposure to. Have you guys bought, uh, used acquisitions as a growth driver?
00:32:03
Speaker 2: I'm trying to think of any actual acquisitions we've done and none come to mind. Uh, we do a lot of partnerships, of course, like, you know, we work with a lot of third parties and we use our technology to integrate them closely into our network in terms of outright acquisitions. Um, None are coming to mind. And there's a reason for that is that acquisitions come with, you know, these companies have their own culture and their own operating philosophy and their own technology stacks. And it turns out that we have to rebuild a lot of what's behind those acquisitions to integrate it effectively into the Amazon network. So we tend to build it ourselves or partner for the most part.
00:32:46
Speaker 1: And, you know, on a personal note, how did you get into the world of supply chains and logistics?
00:32:52
Speaker 2: By accident, just like most of us. I started my career and was in devices for a long time. So I worked at Apple and I worked in Silicon Valley. And then I was part of the founding team at Amazon that did our first devices. So the first Kindles and the first Fire TVs and the first tablets. When Amazon began to build its own middle mile and last mile network, the team that was sort of starting that up asked me to come over and I was kind of ready for a new learning curve. And you know, I remember saying to my boss at the time, I think it was Dave Clark. I'm like, Hey, you know, you realize I know nothing, you know, I have never shipped a package in my life. And his response I think was very telling about the culture of Amazon. It was, well, you know, We have many, many thousands of people who are very good at shipping boxes. We'd like to bring in other skill sets. Right. How to build a business from scratch, how to do product innovation into that team so we can have both the operations expertise as well as the innovation expertise. So I joined the Middle Mile team right when we were first setting it up. I worked with the team to set up a lot of the technology infrastructure. I talked a little bit earlier about how we integrate our third-party partners into our network. I ended up running the freight network overall for a period. And now for the past five or six years, I've been working on taking the Amazon network and externalizing it so that everybody can use it.
00:34:40
Speaker 1: And just on that, on externalizing, what do you think the biggest challenge is to that or has been doing that? Maybe you've overcome that challenge.
00:34:52
Speaker 2: Yeah, well, that's a good question. I would say that we've got a good road ahead of us to continue to adjust our network to make sure that we have all the service capabilities that our customers need. If you're working with a large customer, Let's say Procter & Gamble, for example, or you could do Land's End, you could do 3M, you could do American Eagle. You know, these are large, complex supply chains. And I'd say today we're doing a good job handling part of their volume. But we've got some room to grow in terms of making sure we've got the capability so that they feel good about working with us for the majority of their volume.
00:35:36
Speaker 1: Well, good luck with that. And, you know, before I let you go, there's a question I would like to ask our guests. You know, if you have a favorite book on technology, leadership or transportation that kind of you've read over the years that kind of resonates with you today.
00:35:51
Speaker 2: Well, the one that immediately pops into my mind is Zero to One by Peter Thiel. That that was a seminal book. when I was a younger person, just in terms of the kinds of things that you're likely to face when you're truly trying to innovate. One of those things is that innovation and failure are inseparable twins. So if you're going to innovate, you better get comfortable with failure as well. Absolutely.
00:36:23
Speaker 1: Well, Peter, thank you for joining us today and making the trip to Bloomberg's global headquarters here in New York City.
00:36:29
Speaker 2: Thank you very much for having me.
00:36:30
Speaker 1: We really appreciate you sharing your perspective on Amazon supply chain services, the futures of logistics, and where you see the industry heading. It was really a pleasure having you on Talking Transport. So thank you very much. Thanks, Lee. And thank you for listening. If you enjoyed today's conversation, please subscribe, rate, and review, and share the podcast. We've got a great lineup of guests coming up featuring CEOs, founders, investors, regulators, and innovators from across the transportation and logistics landscape. If you'd like to learn more about the freight transportation logistics market, you can find our research on the Bloomberg Terminal at BIGo. And be sure to connect with me on LinkedIn.
00:37:09
Speaker 2: Or follow me on X at Logistics Lee.
00:37:11
Speaker 1: I'd also like to thank our outstanding producers, Miriam Traor and Aditya Samani, for helping bringing Talking Transports to life every week. This is Lee Klaskow signing off. Talk to you next time.
Speaker 1: Hi everyone, this is Lee Klaskow and we're Talking Transports. Welcome to Bloomberg Intelligence Talking Transports podcast. I'm your host, Lee Klaskow, Senior Freight Transportation Logistics Analyst at Bloomberg Intelligence, Bloomberg's in-house research arm. Before we dive in, quick favor, if you enjoy the podcast, please subscribe, rate, and review, and share it with a friend. Your support helps us continue bringing you conversations with leaders shaping the future of transportation and logistics. And if you'd like to connect, you can always find me on the Bloomberg terminal on LinkedIn or on X at Logistics Lee. Today, we're coming to you from Bloomberg's global headquarters in New York City. Few companies have had a bigger impact on transportation and logistics over the past decade than Amazon. What began as an effort to deliver packages to customers faster and has grown into one of the world's most sophisticated supply chain networks. And now Amazon is making those capabilities available to businesses beyond its own marketplace through Amazon Supply Chain Services. Joining us in the Bloomberg studio is Peter Larson, head of Amazon Supply Chain Services. Today, we'll discuss Amazon's long-term logistics strategy, where it sees the biggest growth opportunities across transportation, warehousing, and supply chain services, how AI is transforming logistics, and how Amazon positions itself alongside many of the industry's legacy transportation providers. Peter, welcome to Talking Transports. It's great to have you here in New York.
00:01:36
Speaker 2: Thanks very much, Lee. I am happy to be here.
00:01:39
Speaker 1: So, you know, what is Amazon Supply Chain Services and kind of what are the problems you're trying to solve?
00:01:46
Speaker 2: Well, we, as you may know, Amazon's a technology company, fundamentally. that just happened to build one of the world's most sophisticated supply chains. And we first built it for ourselves. And then we opened it up to the sellers who sell on Amazon. And we proved it at scale. We've got hundreds of thousands of Amazon sellers using it. And so just recently this year, we opened it up so that any business of any type can use it. It's a little bit like the playbook we ran with AWS a number of years ago. Build it for ourselves and then open it up for everybody to use.
00:02:24
Speaker 1: And at what point was the decision made, you know, whether it's we have the scale or we have the ability to say, let's open it up to third parties outside of your marketplace?
00:02:36
Speaker 2: Yeah. Well, there were a couple interesting inflections in the journey. Actually, a number of interesting points in the journey. But, you know, I'll tell you where a lot of this got started is that Amazon's been building its own fulfillment centers for, you know, since we got going, really. Right. But it was in sort of 2013, the holiday season, where, you know, we were using a lot of third party transportation companies for the last mile delivery. And one of those companies just fell over from unexpected demand. And that meant that we shipped a lot of packages late to prime members. So at that point we decided, well, you know what, in addition to the fulfillment centers, we need to build our middle mile and last mile transportation networks as well. So we set off doing that. Once we got that up and running for ourselves, you know, a big part of the amazon.com business is third-party sellers. And so we opened up that logistics network to our Sellers, otherwise known as FBA or Fulfillment by Amazon, that took off. Sellers were really able to grow their businesses using that service. And that service is where they store their inventory in our warehouses and we pick back and ship it on their behalf for their orders on Amazon. Those same sellers then turned to us and said, listen, we already have your inventory in the Amazon network for our Amazon sales. How about you just let us use that same inventory for our off Amazon channels as well? So we open it up to our Amazon sellers for their off Amazon, whether they sell it on their own direct to consumer sites or another retailer outside of Amazon. Once we did that, we had hundreds and thousands of those sellers using our supply chain services for their off Amazon volume. We decided, well, heck, why not open it up actually to any business of any sort? And so now we're offering it for ourselves, for Amazon sellers, as well as for any company out there.
00:04:42
Speaker 1: So Amazon supply chain services, we're just going to call it ASCS going forward because we only have 40 minutes.
00:04:48
Speaker 2: Yes.
00:04:50
Speaker 1: So, because I'm sure we're going to say it a lot, you know, outside of fulfillment, you know, a lot of folks that are listening, they know that, you know, they get an Amazon package on their doorstep. They know that part of the delivery, but you guys are offering more services beyond just the final mile. Uh, can you just talk about, you know, what markets you're in?
00:05:08
Speaker 2: Yeah. Let me set it up at a high level. So we've built, um, an end to end supply chain, really. So all the way from pick it up from the manufacturer in China, put it on a boat over the ocean, get it through customs, pick it up outside of customs, uh, with a, um, with a freight truck. Take it from that point either to a customer's warehouse or to one of our warehouses. Once it's in our warehouses, you got two options. If it's a consumer order, we can pick back and ship that on your behalf. If it happens to be you want to distribute your pallets to other downstream retailers or partners, we can pick and pack essentially pallets for you as well.
00:05:56
Speaker 1: Mm-hmm.
00:05:57
Speaker 2: And then the last option is if you want to get it over the ocean, for example, put it on our freight trucks and send it to one of your warehouses, you can easily do that. And then if you want to hire our parcel shipping to go to your warehouse to pick up the good that you need sent to your end customer, we can do that as well. So we've got multimodal freight, air, ground, rail, and ocean shipping. We've got distribution and fulfillment, and we've got parcel shipping.
00:06:29
Speaker 1: And so you do truckload, less than truckload. You have freight brokers and freight forwarders and all that.
00:06:35
Speaker 2: We got it. We got it all. You know, I mean, of course, we have a lot of work left to do, but many people don't know, for example, that we're one of the largest freight forwarders that ships containers from China over to North America and Europe. Right. Little known fact, we are one of the largest freight forwarders in the world. Also, little known fact, we have a well-established air cargo network as well, both domestically in the States, but also increasingly from outside the States into the States. So, for example, we run a lot of lanes from Latin America to the U.S. for goods, for example, for Mother's Day, for flowers or for Valentine's Day flowers. cherries from Chile, things that are created outside the U.S. but have to get in really quickly because they're perishable, we use our air cargo network for that.
00:07:35
Speaker 1: And what's the value proposition you guys provide to third-party shippers that are outside your network? Like, why would, if I'm a shipper, why would I use Amazon versus DSV as a freight forwarder or J.B. Hunt in trucking or C.H. Robinson in the brokerage business or you know, recently there's been a lot of news about you guys entering the LTL market. Uh, so every time there's an announcement hits the, the tape, the old, the LTL stocks get, uh, get hit pretty hard. Um, so, you know, what, what's when you, when you guys are selling your services outside of your own, um, marketplace, what, what is that value proposition?
00:08:12
Speaker 2: Well, I think, um, the first thing that we talk about with customers is the benefit of having that end to end network. Um, A lot of our customers have built up their supply chains over years, and they've got five or 10 different fragmented firms that they're working with. And what that means is you've got missed handoffs and visibility gaps in your supply chain. And, you know, it's such a connected system. Any sort of a visibility gap or when there's a problem, any sort of finger pointing is can really have an impact to our customer supply chain. So the first thing that we're providing is really an end to end system that provides visibility throughout. Second thing is that, you know, any disruption that hits in the world, you can be pretty sure that it's hitting Amazon at that same time. So we have built our network over the years to be resilient and Anything that happens, whether it's weather or a political issue or sort of a war, what have you, we have to deal with it for ourselves. And therefore, you get the benefit of our decades of work to proactively adjust to those disruptions so that they don't affect your end customer. Third thing that we talk about is, you know, we build for a peak that is higher than I dare say most others peaks are. So we're investing a considerable amount in our supply chain every year. And we do that because we've got the volume from Amazon.com to support that. So if you have demand spikes here, unlikely to outstrip our capacity. And at any given point, just because we build for a very large peak. And then additionally, we've got over a million robots, for example, in our facilities around the world. It's a lot of investment and, you know, a lot of time that goes into that deployment. Our ASCS customers get the benefit of all that investment we're making for Amazon. It just flows downstream to them and they get it, you know, effectively at a marginal cost. Right.
00:10:31
Speaker 1: And obviously, you know, Amazon's a tech company, but you're obviously a retailer as well. You know, I get it probably either a box or an envelope from Amazon every day at my house.
00:10:42
Speaker 2: Thank you, sir.
00:10:43
Speaker 1: You can thank my family. They're the ones that are doing most of the buying.
00:10:47
Speaker 2: We're in the same boat in my house, believe me.
00:10:50
Speaker 1: But, you know, we love the convenience. But that being that said, are there certain markets where it's tough for you to enter? Because I would imagine a competitor like a Walmart, for example, might not want to leverage you for their LTL freight because, you know, you're competitors. They don't want to necessarily.
00:11:10
Speaker 2: Give you the business.
00:11:11
Speaker 1: Are there markets like that where you're having problems? kind of getting more of a footing because of that competitive nature with other shippers?
00:11:21
Speaker 2: Well, I'm not sure we see a ton of that per se. Like we do, for example, distribute packages based off of Walmart orders or TikTok orders or Sheen orders, you know, pretty much name any marketplace in the book. And if you use Amazon supply chain services, we can fulfill for those marketplaces. You know, I will say that there are certain segments of customers that we're still chipping away at. You know, Amazon does really well at goods that sell on Amazon. Now, the good news there is that we've got over 400 million SKUs on Amazon. So that basket of goods we sell is actually very broad, much, much broader than most people think, but it's not everything. And so you might get some customers who are, um, interested in specialized services, for example, cold chain with GLP right now, booming for obvious reasons. You know, we're, we're, you know, we do a lot of that work in our grocery business and our pharmacy business, but in our sort of core mainline logistics network, we're still working on things like, uh, cold chain, transportation. Those are, you know, those are some examples of places we're still working at to try to.
00:12:46
Speaker 1: And in the same, like, frenemies vein, you know, obviously, given your size, you're a huge purchaser of transportation, even though you're doing a lot of stuff in-house. You know, how do you view companies like DHL or DSV or C.H. Robinson or EPS or J.B. Hunt, for that matter, you know, as competitors, partners, both? Like, how does that relationship work? Because because we've seen UPS kind of glide down their exposure to Amazon over the years. Um, you know, how do you see that relationship going?
00:13:13
Speaker 2: Yeah, we, we, you know, um, the, the logistics market needless to say is, is, is giant and it's growing. And so, you know, we don't really see it as a zero sum game where, you know, we're trying to add new capabilities, uh, for customers rather than sort of take share away from competitors. Um, One of the things that Amazon.com has driven is what I like to think of as a secular change in speed expectations. And so, you know, because we have the prime program and we've just been getting faster and faster and more reliable each year on those last mile shipments, we've had to build our entire network around that speed and certainty. That then increases expectations of Customers who shop outside of Amazon, they're like, well, why can't I get it in one or two days? And why doesn't it arrive when you say it will, just like I do on Amazon? That's a part of the logistics market segment that we're really helping to drive, which we think raises all boats.
00:14:18
Speaker 1: So, you know, in transportation, the stuff that you guys do, you tend to have like an asset light or a non-asset model where you use a lot of third party capacity to do the movement of freight. are there any markets where maybe that model doesn't necessarily work if you truly want to be more of a competitor? Like the LTL space, for example, you know, cross-stock facilities are very important for LTL. They need to be strategically placed across the country. You know, you guys, from what I understand, and please correct me if I'm wrong, you guys are doing most of the movements like from your fulfillment centers when you're consolidating freight. So can you talk about like You know, does Amazon have plans maybe to take more of an asset-based approach to any of these modes of transportation?
00:15:09
Speaker 2: Well, I think it's a mix, honestly, Lee. You know, if you look at any one of our modes, we have a mix of owned assets and third-party assets. And that goes across the, you know, across the chain. The truth of the matter is at our scale, it's very, very hard to... own 100% of the assets yourself. It's just too hard to execute on that. And then similarly, you don't want to be all third party because then you lose a sense of ownership and control over the customer experience, which is really important to us. So across the board, really, it's a mix for us. The thing we do is we use technology to make... Ourselves and our customers relatively agnostic on whether it's a first party asset or a third party asset. Our network operators, in fact, usually don't even know if it's our asset or a third party asset because they're using the same set of technology tools to run the network. And that works pretty well for us.
00:16:23
Speaker 1: And so for ASCS, where do you see the greatest opportunities? Is it the domestic transportation market here in the U.S. or is it outside of the U.S.? Well.
00:16:35
Speaker 2: So first off, ASCS is growing really, really well, I think. And the thing that I've sort of learned over the past few months here is that, you know, there's not a demand, you know, there's plenty of demand. Folks are really interested in having sort of an alternative out there with an end to end supply chain for them to be able to use. They just like the competitive dynamic in the market. They also just like the customer obsession that Amazon brings to it. Like we've been doing it for ourselves for years and they like our attention to detail and our high bar there. I will say that the sort of the non-U.S. market is a huge area of opportunity. You know, there are some things that we've had time to mature in the States that that are a little bit less mature, uh, if you go outside the States, for example, that end to end visibility and, uh, disruption, uh, management, um, those things we've got pretty well tuned here in the States. And as you go outside the States, we have some really nice opportunity for improvement there. Uh, we also, uh, just because outside the, you know, outside the States, most countries just aren't as large. And so it's, definitionally a little bit more fragmented outside the US. So our technology binding, so to speak, can really play a good role in getting rid of the fragmentation a lot of customers have to deal with on a daily basis and just making it look like one easy to use network. Here's one quick example. Over in the EU, for example, as a customer, you can store your inventory in one of our warehouses, let's say in Germany, but you can actually fulfill across 20, I think it's 27, 26 EU states from that one pool of inventory in Germany. And that's seamless to the end customer. You don't have to have your inventory in 26 different spots. You can have it in one. Gotcha.
00:18:34
Speaker 1: And so looking here in the domestic market, where do you guys see the most growth for ASCS? Is it the LTL side? Is it the freight brokerage side? Is it forwarding?
00:18:45
Speaker 2: Is it fulfillment?
00:18:46
Speaker 1: Where is the growth for the organization?
00:18:49
Speaker 2: Yeah. Well... I'll tell you, all of the modes are growing very nicely. I'll say that our partial shipping business is cooking with gas, as one of my former bosses used to say. That's growing really, really quickly. And I think it's because the same last mile network that does the delivery to end customers for Amazon is now doing it for business of all shapes and sizes. So you get the same speed, same delivery. same resilience. You get the little maps that show up on your phone that show where it is. I think those are.
00:19:26
Speaker 1: And your cost to serve is lower than the legacy players.
00:19:29
Speaker 2: Cost to serve is strong as well. We like to think of it as we deliver the most value per dollar spent. You know, we are unlikely to ever be the sort of the cheapest alternative out there. That's just not how we think about it. We want to provide the most services per dollar of anybody else. Um, So you don't really use us if you want like the cheapest and the slowest. You use us if you want the best service, which then can hopefully grow your overall business. Because, you know, we said Amazon, if there's one thing we've learned over the past 25 years or so is that supply chain is actually a growth driver, not just a cost center.
00:20:08
Speaker 1: And so, you know, obviously within Amazon's DNA, you're a technology company that happens to do other things and do them quite well. There's been a huge conversation about how AI is going to be disrupting the supply chain and logistics industries. Can you talk about, you know, how Amazon is using AI within its supply chain and kind of where you see the benefits and where you see that going going forward?
00:20:34
Speaker 2: Yeah, we've been using AI for a number of years, of course, beginning really with machine learning. And now it's moving as quickly as I've ever seen any technology transition into large language model and agents. The things that have been working for a number of years for us with regards to AI, the first is disruption management. which is something happens in the world and we need to reroute our network. All that's been happening automatically for a number of years. Second thing, a place where we have a heavy use of AI is in inventory placement. We have over 400 million SKUs, as I said a little bit earlier, for sale on Amazon.com. And we have to forecast placement for that inventory on an almost real-time basis. And that really matters these days, particularly for our ASCS customers, because they're not just selling on Amazon. They're also selling on marketplaces like TikTok, for example. And they can have real demand spikes on TikTok. And they need to make sure that their inventory is in the right warehouse to fulfill that demand. Our AI inventory placement algorithms are behind a lot of that placement for us. I think that the trend, of course, along with everybody, is to move to not only detection and monitoring, but then following on to action. If I am using AI to figure out where inventory needs to be in the network and I don't have enough in a particular location, right now a human being has to step in and make that inventory transfer. Very, very shortly, agents are going to be making that inventory transfer. And the human beings are going to be more focused on strategy and scenario planning.
00:22:52
Speaker 1: Okay. And as leading ASCS in your seat, is there a technology that you're really excited about, whether it's, you know, automation or autonomous trucking or, you know, developments in AI that you really think are going to, you know, benefit your supply chains?
00:23:13
Speaker 2: Well, the two that come to mind immediately is, you know, I do think AI is going to make our sustainability program even more effective. Getting a package from place A to place B in the shortest, most efficient route in the face of disruptions, I think we're going to save a lot of miles on the road and a lot of miles in the air because of AI because of that, and the world will be better off for it. I think the second thing is robotics. As I said a little bit earlier, we've got over a million robots deployed in our networks today. And the pace of improvement of what those robots can do is amazing, quite frankly. And we have moved from moving pallets of things across warehouses within a divine zone for the robots to picking and packing with arms or robots that can move throughout the warehouse intermingled with our associates at a very high rate. And I think that is going to keep accelerating over the next few years here. That's important because all of that both improves safety, but it also lets us get more demand over through the same network. And that, of course, decreases variable costs. We can pass those lower costs on to our ASCS customers.
00:24:51
Speaker 1: So we're in an environment right now where air freight rates are relatively high, container rates are relatively high, trucking markets here in the U.S. are seeing rates increasing. How is that impacting ASCS? And, you know, while obviously higher rates might hurt Amazon's margins, but do they benefit? Do you have your own operating margins where you're trying to operate as a profit?
00:25:19
Speaker 2: Yeah, we're being hit with higher costs, particularly for freight and trucking, just like everybody else is, quite frankly. And there are the fuel costs that we have to absorb. And then there are some new regulations in place that that mean that there are fewer truck drivers available, and that also increases costs over time. So we're having to deal with those on a daily basis. That was not the increase in trucking costs. We had models that forecasted what we thought the supply cost was going to do this year, We did not anticipate the rate at which costs increase this year. So we've had to work hard to make sure that those increased costs don't show up to our customers.
00:26:14
Speaker 1: Yeah, spot trucking rates are up around like 30%, 35%, excluding fuel surcharges. And then contractual rates are up, call it 9% to 10% year over year. So they're definitely moving higher. And given that, so are you guys using intermodal more? Do you use intermodal? Is that part of your strategy?
00:26:30
Speaker 2: Yeah, we do. We've had an intermodal mode for a number of years. And as you can expect, as trucking costs go up, we're shifting more and more of our volume to intermodal. One of the things we're doing is we're working with the railway companies so that they adopt our technology. so that things can move faster with higher visibility throughout the intermodal network. Nirvana would be we can put a lot of stuff on trains, and they get there just as fast and just as reliably as they do on trucks. We've got a little ways to go, but we're making some good strides with our partners there.
00:27:14
Speaker 1: Do you have a one-rail partner that you're using predominantly in the west and one in the east, or are you kind of agnostic?
00:27:20
Speaker 2: It's a mix. Uh, we, you know, we use most of the, you know, again, at our scale, uh, you know, we use most of the, um, available supply that's out there. It's, it's, it's highly likely that we're using them in one form or another.
00:27:33
Speaker 1: So if there's one thing that you could do for Amazon to make its supply chain more efficient today, what, what, what would it be?
00:27:42
Speaker 2: That's a great question. I think, uh, There are a couple of things that we're working on, I guess, that I think come to mind first and foremost. First of all, there's just the infusion of AI across every aspect of our operation. And that continues on a daily basis. Second thing is, you know, some of the aspects of our services that have worked really well for Amazon, it turns out that when we're servicing Amazon, Non-Amazon sellers, we need to sort of adjust our operating a bit to meet their needs. Here's a case in point. Our whole network is built off of speed. And so we frequently will arrive at pickups or drop-offs. Let's just say it's freight or it could be parcels. Now, you know, in a lot of, in most cases, dare I say it in the world, you know, early is good or early is okay. In the logistics business, it turns out that, of course, if we're too early, you know, the doctor might not be available. The personnel might not be available. So we've had to tighten up our technology controls to make sure that our drivers don't show up too early. That's an example of the kinds of adjustments we're having to make to our network on a daily basis to make sure it not only works well for Amazon volume, but also for off Amazon volume as well.
00:29:14
Speaker 1: And, you know, are there things that customers are asking you today that they weren't asking for a couple of years ago, whether it's services or performance measurements?
00:29:26
Speaker 2: Yeah. Well, a couple of things that come to mind there is, I talked a little earlier about they just continue to want an end-to-end seamless network. They really would love the convenience of having one partner that can service most of their volume across modes. As I said earlier, many customers are using a fragmented supply chain and that just makes things much more complicated and it increases costs. And so we continue to knit our services together in a way that makes it really easy for our customers both to use and to get visibility on. And that increases ease of use, but it also decreases costs. That's one area. Another area that they are increasingly asking for is help me take advantage of international markets. Right now it's hard or it's relatively hard to, Let's say that you sell stuff in the U.S. and you want to start to sell stuff outside of the U.S. That's a complicated process, and we're trying to make that easier and easier for sellers. Because we do it for Amazon.com, we can externalize a lot of those capabilities for our non-Amazon customers as well to make it easy for them to expand across the world. I think a third thing I mentioned a little bit earlier is that They basically want AI not only to do things reactively, but proactively as well. So don't only detect what's going on out there, but also action it. That just, for the most part, that's going to decrease the amount of work that they have to do on their end. And their staff can then really only have to deal with the exceptional disruptions. generally supply chain is call it 60% of most of our customers' cost bases. You know, anything you can do to make that a little bit more simple and proactive is going to be a good thing for their businesses.
00:31:41
Speaker 1: And so has your strategy in the past been to grow all these services organic, or have you guys gone out and bought like a freight forwarder or a freight broker to, you know, enhance a certain part of the market that maybe you're not in, whether that is from a you know, a lot of like freight forwarders will buy another freight forwarder, a different country where they don't have exposure to. Have you guys bought, uh, used acquisitions as a growth driver?
00:32:03
Speaker 2: I'm trying to think of any actual acquisitions we've done and none come to mind. Uh, we do a lot of partnerships, of course, like, you know, we work with a lot of third parties and we use our technology to integrate them closely into our network in terms of outright acquisitions. Um, None are coming to mind. And there's a reason for that is that acquisitions come with, you know, these companies have their own culture and their own operating philosophy and their own technology stacks. And it turns out that we have to rebuild a lot of what's behind those acquisitions to integrate it effectively into the Amazon network. So we tend to build it ourselves or partner for the most part.
00:32:46
Speaker 1: And, you know, on a personal note, how did you get into the world of supply chains and logistics?
00:32:52
Speaker 2: By accident, just like most of us. I started my career and was in devices for a long time. So I worked at Apple and I worked in Silicon Valley. And then I was part of the founding team at Amazon that did our first devices. So the first Kindles and the first Fire TVs and the first tablets. When Amazon began to build its own middle mile and last mile network, the team that was sort of starting that up asked me to come over and I was kind of ready for a new learning curve. And you know, I remember saying to my boss at the time, I think it was Dave Clark. I'm like, Hey, you know, you realize I know nothing, you know, I have never shipped a package in my life. And his response I think was very telling about the culture of Amazon. It was, well, you know, We have many, many thousands of people who are very good at shipping boxes. We'd like to bring in other skill sets. Right. How to build a business from scratch, how to do product innovation into that team so we can have both the operations expertise as well as the innovation expertise. So I joined the Middle Mile team right when we were first setting it up. I worked with the team to set up a lot of the technology infrastructure. I talked a little bit earlier about how we integrate our third-party partners into our network. I ended up running the freight network overall for a period. And now for the past five or six years, I've been working on taking the Amazon network and externalizing it so that everybody can use it.
00:34:40
Speaker 1: And just on that, on externalizing, what do you think the biggest challenge is to that or has been doing that? Maybe you've overcome that challenge.
00:34:52
Speaker 2: Yeah, well, that's a good question. I would say that we've got a good road ahead of us to continue to adjust our network to make sure that we have all the service capabilities that our customers need. If you're working with a large customer, Let's say Procter & Gamble, for example, or you could do Land's End, you could do 3M, you could do American Eagle. You know, these are large, complex supply chains. And I'd say today we're doing a good job handling part of their volume. But we've got some room to grow in terms of making sure we've got the capability so that they feel good about working with us for the majority of their volume.
00:35:36
Speaker 1: Well, good luck with that. And, you know, before I let you go, there's a question I would like to ask our guests. You know, if you have a favorite book on technology, leadership or transportation that kind of you've read over the years that kind of resonates with you today.
00:35:51
Speaker 2: Well, the one that immediately pops into my mind is Zero to One by Peter Thiel. That that was a seminal book. when I was a younger person, just in terms of the kinds of things that you're likely to face when you're truly trying to innovate. One of those things is that innovation and failure are inseparable twins. So if you're going to innovate, you better get comfortable with failure as well. Absolutely.
00:36:23
Speaker 1: Well, Peter, thank you for joining us today and making the trip to Bloomberg's global headquarters here in New York City.
00:36:29
Speaker 2: Thank you very much for having me.
00:36:30
Speaker 1: We really appreciate you sharing your perspective on Amazon supply chain services, the futures of logistics, and where you see the industry heading. It was really a pleasure having you on Talking Transport. So thank you very much. Thanks, Lee. And thank you for listening. If you enjoyed today's conversation, please subscribe, rate, and review, and share the podcast. We've got a great lineup of guests coming up featuring CEOs, founders, investors, regulators, and innovators from across the transportation and logistics landscape. If you'd like to learn more about the freight transportation logistics market, you can find our research on the Bloomberg Terminal at BIGo. And be sure to connect with me on LinkedIn.
00:37:09
Speaker 2: Or follow me on X at Logistics Lee.
00:37:11
Speaker 1: I'd also like to thank our outstanding producers, Miriam Traor and Aditya Samani, for helping bringing Talking Transports to life every week. This is Lee Klaskow signing off. Talk to you next time.
