Amazon is building a logistics empire — and Morgan Stanley says the e-retailer is now ‘the elephant in the boardroom’ for one of America’s largest trucking companies

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Amazon is building a logistics empire — and Morgan Stanley says the e-retailer is now ‘the elephant in the boardroom’ for one of America’s largest trucking companies

Amazon’s network of branded truck trailers, aircraft, sprinter vans, and ocean freighters means the company can move goods without going to third-party logistics companies. It’s a cost-saver for a company whose delivery costs are “ballooning.”

But it’s not cheery news for the trucking and transportation companies who have generated hundreds of millions of dollars in revenues from moving Amazon goods. XPO Logistics, for instance, announced earlier this year that they would lose $600 million in revenues in 2019 because its largest customer, which they did not name but was identified by insiders as Amazon, was moving logistics services in-house.

Analysts have also warned that UPS and FedEx should be wary of Amazon developing its own third-party logistics service.

Read more:UBS is now sounding the alarm on Amazon taking on UPS and FedEx — and analysts say the logistics giants have ‘limited’ tools to fight back

Now, J.B. Hunt, which generated $8.6 billion in revenue last year, is the latest transportation giant that’s picked up on Amazon’s logistics aspirations. That’s according to Morgan Stanley’s team of transportation analysts, who recently visited J.B. Hunt’s headquarters in Lowell, Arkansas.

Amazon is a top 10 customer of J.B. Hunt and uses all of its service offerings, according to a March 14 Morgan Stanley note to investors. But, now that Amazon is developing its own trucking and transportation network, its dependence on J.B. Hunt might suddenly drop.

Wolfe Research; Andy Kiersz/Business Insider

“Amazon is the elephant in the boardroom,” Morgan Stanley transportation analysts wrote in the note.

On the other hand, J.B. Hunt’s C-suite appears to be comfortable with the idea of Amazon curtailing its dependence on the company’s logistics offerings.

“(J.B. Hunt management) believes Amazon is a company in transformation, like Walmart and Home Depot once were,” Morgan Stanley analysts wrote. “However, J.B. Hunt has more than a decade of relationship with Amazon and understands their customer very well.”

“J.B. Hunt will look to grow with Amazon and other customers but management is acutely aware of changing shipper-carrier dynamics and the potential for not just sudden insourcing but also potentially competing with some of their customers, over time,” they continued.

Read more: It’s becoming clearer than ever that Amazon is developing a 3rd-party logistics service to edge out FedEx and UPS now that Stamps.com has dumped USPS

It’s not just Amazon that J.B. Hunt is monitoring, according to Morgan Stanley’s note. They’re aware that their corporate neighbor Walmart, which is also based some 10 miles away in Northwestern Arkansas, is moving some of its own transportation services in-house.

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