Amazon has quietly registered with the Federal Marine Commission (FMC) to provide Ocean Freight Services in USA. Therefore, The move will see Amazon finally push its considerable resources into the realm of logistics. Putting it firmly on collision course with such established shipping corporations as FedEx and UPS.
What Does the New Role Entail?
Rather than employing crews or buying cargo ships of its own, Amazon will coordinate shipment activities. It will provide logistical support and for international exporters. However, amongst other services it will help provide transport from warehouses to ports. Arrange booking for containers, and carry out processing and documentation across customs borders. As of January the company has carried out freight forwarding on at least 150 shipments from China to the US.
Amazon’s newfound interest in ocean fright 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. That saw Amazon unveil 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 This Expansion 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 having to rely on third-party freight forwarding services.
Therefore by staking its own territory in the shipment market, Amazon offers Chinese suppliers an opportunity to access its impressive customer base. However, acting as a clear alternative to Alibaba. Choosing Amazon means that Chinese suppliers can plug their goods directly into Amazon’s massive, growing logistical network.
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.
American suppliers on the other hand will 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 just cut out the middle man and start buying directly from suppliers instead.
The Place for Online Shopping
The last holiday season saw Amazon make over a billion sales, but the growth in sales also the company suffer delivery issues. As partnered delivery partners such as UPS and FedEx, limited the express shipping services they offered 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.
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