Stifel Sees Amazon Emerging As The Top Logistics Company In The World

• Amazon.com, Inc. AMZN shares have jumped 27 percent in the last three months.
• Stifel’s John G. Larkin said that Amazon is emerging as the World’s leading logistics company, which may not be the only game changer in the next 10 years.

Analyst John Larkin maintained a bullish outlook for the transportation and logistics industry in the longer term. He believes that demand for freight transportation would exceed the rate of broader economic growth, while incremental capacity growth may not be able to keep pace with the growth of freight.

Referring to Amazon, Larkin commented that Amazon continues to raise the bar. The company does not seem constrained by the pressure to consistently generate money. This has allowed Amazon to define the emerging e-commerce supply chain. With this, the company has widened the gap with other e-commerce participants, especially those that have brick and mortar infrastructure.

“With the incremental volume provided by other retailers, desiring to replicate Amazon delivery network, the company could further drive its costs of delivery per unit down and essentially make the majority of its profits in its logistics business rather than its retail business.” This possible outcome could be accelerated if Amazon brings more and more of its overall logistics operation in-house.

Amazon has developed a largely self-contained, low cost supply chain, which could have a negative impact on the margins and/or market share for its retail competitors and/or transportation and logistics service providers.