Thursday 29 September 2016

Amazon's Chinese arm registers as freight forwarder for shipping goods to US market

Mari Saito

Published 17/01/2016 | 02:30

Amazon will have more control over shipping its products
Amazon will have more control over shipping its products

Amazon.com Inc's China arm has registered as an ocean freight forwarder, according to the US Federal Maritime Commission - a move that will give it more control over shipping products from Chinese factories to US shoppers.

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The registration is the latest indication that Amazon plans to expand its logistics reach to cut costs for its retail business and potentially provide third-party logistics services to other industries.

Its new status as a freight forwarder, or "non-vessel operating common carrier," gives Amazon, the world's largest online retailer, a foothold in the $350bn-a-year ocean freight business. It will not operate ships but will subcontract that work.

Amazon is already negotiating a deal to lease 20 jets to start an air-delivery service in the United States, the Seattle Times reported last year.

The retailer bought truck trailers to add shipping capacity and started a programme last year that uses a fleet of on-demand drivers to deliver packages.

"It has more and more control over the supply chain of their business and it gives them the ability to squeeze [costs] even further," said Satish Jindel, a logistics consultant and president of SJ Consulting Group. He added that the move gives Amazon an even bigger edge against traditional US retailers in negotiating lower prices for goods.

The Federal Maritime Commission, a US government agency that regulates the US/international ocean transport system, said on Thursday a business named Beijing Century Joyo Courier Service Co Ltd, with the trade names Amazon China, Amazon.CN and Amazon Global Logistics China, was registered in its database to provide ocean freight services.

"Amazon's ocean freight services will be far more attractive to Chinese sellers than to American buyers. Chinese suppliers would love direct access to Amazon's vast American customer base," wrote Ryan Petersen, chief executive officer of Flexport, a San Francisco-based freight forwarder who first wrote about Amazon's registration on his company blog on Thursday.

Petersen added that Amazon's third-party merchants were unlikely to use its shipping service because it would expose key data like wholesale pricing and supplier names to a rival.

Amazon declined to comment.

Reuters

Reuters

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