The Surprising Way Shipping Containers Could Improve Your Amazon Experience
February 1, 2018
There’s something big happening in the trucking and logistics industry. Drivers, the group of people responsible for nearly all of on-ground shipping and delivery are about to become much less productive. Today, our Logistics Director spoke to the whole team about the legal changes made by the DMV and how they will affect the shipping prices of everything from hair ties to grand pianos.
What is happening in the Logistics Industry?
Trucking is about to become very expensive. In 2012 Congress passed a bill outlining mandatory breaks and stops for truckers after an allotted time. After that time limit has passed, truckers are supposed to stop and rest for 10 hours or more. To assure compliance, the bill also required that logs be kept of driver activity. Paper logs allowed for some flexibility with these rules, but very soon Electronic logging devices (ELD) will be fully implemented across the industry. Experts believe this will result in a significant drop in driver productivity. This article suggests that as a direct result, truck utilization will rise to 100%, creating scarcity in the market and driving prices sky-high.
How will ELDs affect me?
Higher trucking prices will inevitably mean higher shipping costs. And there’s Amazon’s soft underbelly. The retail giant is deeply invested in shipping. They’ve already done some branching out into brick & mortar and bought into some established retailers like Whole Foods. Will that be enough?
Probably not. We expect that they’ll either need to raise prices or raise the threshold for free shipping in their Fulfillment by Amazon (FBA) program. Independent sellers will be 100% responsible for those rising costs, and they’ll likely pass that cost on to you.
Is there another way?
Yes. And it starts in the parking lot. Amazon has set up their network to perfectly fit semi-permanent pick-up locations in Whole Food’s parking lots.
Some of Amazon’s competitors are already taking on the challenge. Last year, Wal-Mart started developing convenience stores that offered free, same-day online pickups.
There’s already some precedent within the company. As we speak, Amazon is expanding their “Treasure Trucks” initiative into Whole Foods parking lots. The trucks themselves aren’t new, but the program is a new way for the retailer to engage audiences in unexpected places. The customers who have signed up for alerts can buy discounted items on the Amazon app and then pick up their purchases at the parked trucks.
If these tests go well, it could mean more permanent package pick-up hubs across the country. The only question left, what’s the best way to implement such a wide-spread plan?
The case for shipping containers
Speed to Market
Although containers can be modified on-site like traditional stick-built structures, they become much more powerful in a modular and manufacturing methodology. Because there are no stops for weather, inefficiencies, and theft, container structures can be engineered, built, and inspected in a much faster timeframe. About 30-50% faster to be exact. That mean’s you’ll have less time to wait for a hub to arrive in your neighborhood.
Shipping Containers are built to be…shipped! So, every structure is inherently mobile. Particularly with offsite construction, ensuring that each module is built to be moved easily and without sacrificing the safety, look, or footprint of a space can be difficult. The secret is in the container and expertly chosen materials.
By utilizing Boxman Studios’ product, clients can receive tax benefits. Based on IRS Publication 946, container structures are categorized as 7-year tax life property. Specifically, the code states, “Any property that does not have a class life and has not been designated by law as being in any other class.” This means that modular units are not called out in the IRS Publication 946, therefore it defaults to a 7-year property, which allows you to depreciate the units over a 7-year tax life. Commercial traditional stick-built construction in IRS Publication 4562 is classified as nonresidential real property, which has a depreciation period of 39 years.
We aren’t accountants but simply put, they could be the recipient of some major tax benefits for utilizing purpose-built and shipping container structures as part of the initiative.
With an unmanned post, security is extremely important. We don’t want anyone swiping your stuff! That’s why containers are perfect for pick-up hubs. The tightly locked, steel box means no one has to worry about missing packages.
How will Amazon respond to the evolving logistics climate? Will they raise prices? Will they throw all their hats into the treasure trucks? Will they come up with something completely different? We’ll have to wait and see. In the meantime, if you liked this article, sign up for our newsletter below. We send out great content like this once a month. No more; no less!