Amazon’s ocean shipping ambitions become clearer

Amazon’s ocean shipping ambitions become clearer

 

Amazon’s ambitions to take more control of its container shipping have become more apparent after the e-commerce giant filed an application with the Shanghai Shipping Exchange to be forwarder on 12 major routes and a 2013 internal proposal reveals its vision for a global delivery network.

The filing and revealing of the initiative by Bloomberg is sure to fuel speculation that Amazon plans to further edge FedEx and UPS out of the handling of its goods. The describing of itself as a “transportation service provider” in a 10K filing in late January, its newly received U.S. non-vessel-operating common carrier license, its purchase of trailers for U.S. delivery, and reports that it might handle some of its own air cargo have provided peeks into how the company is moving beyond control of distribution hubs to the links between them and suppliers.

Amazon filed an application with the Shanghai Shipping Exchange to provide brokering services on 12 lanes, including from Shanghai to Los Angeles and Hamburg, according to a Reuters report. The Seattle-based company’s subsidiary Beijing Century JOYO Courier Service Co. told the SSE in a filing that it would charge $530 to $2,350 for transporting a 40-foot container from Shanghai to Hamburg. The average spot rate to move a 20-foot container from Shanghai to North Europe is $431, down 59 percent from a year ago, according to the latest reading of the SSE freight index displayed on the JOC.com Market Data Hub.

Via its NVOCC status, Amazon could gain a profitable niche in transporting goods from Chinese suppliers to the U.S. and increase its buying power with container lines.

“A larger percentage of (Amazon’s) Chinese shippers are sending small amounts of freight,” Steve Ferreira, founder of Ocean Audit, a Connecticut-based global ocean freight auditing service, told JOC.com last month. “The most striking thing is Amazon’s ability to co-op a lot of smaller Chinese vendors and make one huge vendor.”

According to the internal proposal by Amazon’s senior management team, the Seattle-based firm would launch “Global Supply Chain by Amazon” as soon as this year, according to Bloomberg. The initiative would allow Amazon to circumvent forwarders by first partnering with them and then pushing them out once it gains enough expertise and buying power through increased volume brokering.

“Sellers will no longer book with DHL, UPS or Fedex but will book directly with Amazon,” according to the report.  “The ease and transparency of this disintermediation will be revolutionary and sellers will flock to (Fulfillment by Amazon) given the competitive pricing.”