In November 2015, the U.S. Government Federal Maritime Commission received a registration request from Beijing Century Joyo Courier Services to become an ocean shipping provider. The significance of this is that the Beijing Century Joyo Courier Services is a subsidiary of Amazon. Yes. THAT website.
With expansions already reaching in air transportation and trucking, the decision for Amazon to enter the trillion-dollar freight industry will have enormous effects on Amazon’s international sellers, importers, and end consumers in America – in essence, changing the very DNA of one of the world’s largest industries. Starting out about 20 years ago as an online retailer when eBay was still to popular “go-to” for many people, Amazon has kept up with consumer demands and changing requests, shifting from online retailer to “Business to Business” service provider, offering a plethora of critical infrastructure as a service to other businesses by creating powerful self-service platforms that allow regular people to experiment and accomplish things that were originally thought “impossible.” Because of this, eBay quickly grew out of favor with many people as they shifted over to Amazon to fulfill their needs instead.
Amazon understood that delivery, and the control over the entire process of delivering their product, is one of their most important focuses they would like to overcome as they transitioned into the New Year following the courier shipping delays in the 2014 holiday season. With ocean freight now dropping to record lows as ship owners struggle to raise them prior to 2017 contract negotiations, Amazon has one key advantage over the entire freight forwarding industry right now: automation. Amazon has perfected the art of automation to the point that if you were to compare Amazon to ANY freight forwarding company, or even all of them put together, and Amazon could still easily outperform them all when it comes to automation. By using software to eliminate additional transaction costs associated with government filings, status updates, pricings, bookings, and more, Amazon will be able to cut their costs significantly – and by fulfilling products directly from China to consumers in the U.S. will cut handling costs at U.S. warehouses, which will make it a huge hit with Chinese merchants.
This has actually been a long time coming smart move on Amazon’s part. By offering ocean freight services, Fulfillment by Amazon (FBA) is making it easier for their customers to move goods via the company’s own logistic network. Because most of (Amazon’s) Chinese shippers are sending small amounts of freight, “The most striking thing is Amazon’s ability to co-op a lot of smaller Chinese vendors and make one huge vendor.” says Steve Ferreira, founder of Ocean Audit, a Connecticut-based global ocean freight auditing service. Being able to add handling and bill documentation charges, amongst other fees, Amazon can “double-dip” into the revenue stream and have better control of their entire market process from start to finish carrying their own cargo under their own bill of lading.
As of now though, with Amazon’s reputation for ruthless competition and their desire to dominate ALL markets on planet earth; based on previous results, we know that once Amazon puts their mind on something, they are set to execute it. With the ability to execute their thoughts cleanly with a well thought out step by step, simple, fool-proof process, perhaps this is something that the freight forwarding industry can learn and take a page from to update ourselves on how we can evolve from our ancient processes to catch up with the world and technology.
- Is Logistics About to get Amazon’ed? (Techcrunch)
- Amazon the Freight Forwarder? My Shipping Sense is Tingling! (Universal Cargo)
- Introducing Ocean Freight by Amazon: Ecommerce Giant Has Registered to Provide Ocean Freight Services (Flexport)
- Amazon’s New Jets Represent a Serious Threat to FedEx and UPS (Updated) (Flexport)
- Amazon Considering Options After UPS Delays (The Motley Fool)
- Amazon’s NVOCC Status Opens Dorr to New Business, Cheaper Rates (JOC)
- Amazon Gets OK to Operate as NVOCC from China to US (JOC)