Amazon Effect Fosters Added Trucking Exposures

// June 6, 2019
Reading Time: 3 minutes

According to Shorr Packaging Corp., 54 million tons of freight move across the U.S. every day. Furthermore, the U.S. Department of Transportation projects that by 2040, 29 billion tons of freight will be transported every year, mostly on the back of a truck.

Many experts attribute the rise in shipping to the so-called “Amazon effect,” which “describes the need for the transport industries to adapt to Amazon’s practices.”

The popularity of Amazon skyrocketed in 2005 when the company began offering Amazon Prime, a membership extending free two-day shipping on eligible purchases for an annual fee. Fast forward to 2019; one study indicates that Amazon Prime currently has over 101 million members in the U.S. and that these members spend more than double the amount non-members do annually (Fortune).

Other online retailers quickly recognized the benefits of labeling shipping as “free” and have adopted similar shipping practices in an effort to increase profits. However, Amazon and other retailers seem to have underestimated the effect free shipping would have on the shipping and transportation industries.

Amazon reported a loss of $636 million in shipping costs in 2012, due in part to absorbing the shipping costs on orders that qualified for free shipping. In response, the company has opened more fulfillment warehouses near heavily populated areas to reduce costs and the length of shipping routes. These additional warehouses have had a significant influence on the trucking industry as well (Shorr Packaging Corp).

According to the American Trucking Associations, the total population of trucks in the U.S. is predicted to grow by 26%, and total miles driven will increase by 38%, by 2023. With businesses spending more on shipping and transportation than ever before and an increased number of trucks on the road, there is also increased exposure for loss.

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The trucking industry will continue to grow progressively over the next few years. Contact your Commercial Lines underwriter to learn more about this trend and how our Truckers product can assist with coverage!


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Cheryl-RussellContact Cheryl Ryan,
Executive Vice President, Division Leader | 844-438-6775, ext. 2582

Danielle ConnerWritten by Danielle Conner
June 6, 2019