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Thursday, June 29, 2017

It Begins: WalMart Warns Truckers It Will No Longer Work With Them If They Move Goods For Amazon

The cold war between America's two largest retailers just turned hot.
In a note this morning from Deutsche Bank's freight and logistics analyst Amit Mehrotra, he notes that  the "WMT vs. AMZN battle is heating up" and points to a report by DV Velocity, according to which a well-respected transportation industry consultant told attendees of a logistics conference that Walmart (WMT) is telling trucking companies that it will no longer do business with them if they continue moving goods for Amazon (AMZN).
This follows similar reports citing WMT’s “request” for its tech partners to stop using Amazon Web Services.
The news, while suggestive perhaps of Walmart's growing desperation in its war with the retail juggernaut that is Amazon, has dramatic implications not only for the future of retail (and associated prices) but for one of the most important US industries: trucking, and the number of people it employs.
According to Deutsche, these developments, "are likely to have significant implications for U.S. transportation companies, in our view, as Amazon and Walmart remain two of the largest users of truckload capacity. For reference, Walmart represents about 14% of SWFT’s operating revenues and traditional retail accounts for about half of WERN's total sales (WMT around 4%)."
A map of Amazon's multiplying fulfillment centers is shown below.
And, as CNBC reported last week, WalMart warned some tech companies that if they want Wal-Mart's business, they can't run applications on Amazon's cloud platform, Amazon Web Services, some tech companies told The Wall Street Journal. Wal-Mart uses some tech vendors' cloud apps that run on AWS, Wal-Mart spokesman Dan Toporek told the Journal, though he declined to say which apps or how many. But Toporek did acknowledge instances where Wal-Mart is pushing for AWS alternatives, the Journal reported Wednesday. 
Wal-Mart spokesman Toporek told CNBC in an email: "Our vendors have the choice of using any cloud provider that meets their needs and their customers' needs. It shouldn't be a big surprise that there are cases in which we'd prefer our most sensitive data isn't sitting on a competitor's platform." Wal-Mart doesn't appear to be alone in this push to leave AWS, either.

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