Amazon has quietly registered with the Federal Maritime Commission (FMC) to provide Amazon Ocean Freight services in the USA. Therefore, the move will see Amazon finally push its considerable resources into the realm of logistics, putting it firmly on a collision course with established shipping corporations like FedEx and UPS. In this blog, we’ll explore what this means for the shipping industry and how Amazon’s ocean freight services could reshape global logistics.
What Does Amazon Ocean Freight’s New Role Involve?
Rather than buying cargo ships or employing crews, Amazon Ocean Freight will focus on coordinating shipment activities. The company will provide logistical support for international exporters, including arranging transport from warehouses to ports and handling customs documentation. As of January, Amazon has completed freight forwarding for at least 150 shipments from China to the US.
Amazon’s newfound interest in ocean freight comes as it continues to push into air transport as well. Early in 2015, the company was reported to have entered into a leasing agreement with Boeing. Amazon unveiled the first of 40 branded cargo jetliners that will make up its Amazon Prime Air delivery service. Plus, they are already operating their own trucks and tractor-trailers across major cities in the US. Ostensibly to speed up movement between the 180 Amazon-owned warehouses they have located throughout the country.
What Does The Expansion of Amazon Ocean Freight Mean?
Furthermore, Amazon’s main incentive for expanding its logistical control is the growing competition it’s facing from Chinese behemoth Alibaba. As part of its new online import/export service “OneTouch,” Alibaba announced partnerships with leading transport and logistics providers like Maersk and CMA-CGM this past year. These new partnerships were seen as a clear attempt to help Chinese manufacturers ship goods across the Pacific to U.S markets without relying on third-party freight forwarding services.
Amazon Ocean Freight as a Strategic Alternative
By staking its territory in the shipment market, Amazon offers Chinese suppliers an opportunity to access its impressive customer base, acting as a clear alternative to Alibaba. Choosing Amazon means Chinese suppliers can plug their goods directly into Amazon’s massive, growing logistical network.
Cost Savings and Logistical Efficiency
Amazon also promises great cost savings over their rivals. Signing onto their services means Chinese suppliers don’t have to worry about the increasing costs associated with hand-offs across the supply chain. Instead, Amazon’s cutting-edge software can handle filing, pricing, bookings, and any other logistical needs that may arise.
The Challenge for American Suppliers
American suppliers, on the other hand, may be less likely to enlist Amazon’s help for their shipping needs. The e-commerce giant has already proven itself more than capable of ruthlessly undercutting the competition, and by entrusting sensitive supplier data to Amazon, many of these companies fear that Amazon might cut out the middleman and start buying directly from suppliers instead.
The Place for Online Shopping
The last holiday season saw Amazon make over a billion dollars in sales, but the growth in sales also caused the company to suffer delivery issues. Partners such as UPS and FedEx have limited the express shipping services they offer to the company. By taking greater control of its own shipping capabilities, it seems that Amazon is looking to plug up vulnerabilities in its supply chain. And gain even greater flexibility as it grows internationally.
