In yet another move toward e-commerce domination, Amazon China is taking strides to become an ocean freight forwarder—meaning Amazon would be its own delivery service for getting goods from Chinese factories to U.S. shoppers.
According to freight forwarder Flexport, which broke the news after uncovering Amazon’s registration to operate with the Federal Maritime Commission, there’s a reason becoming a freight forwarder makes sense for Amazon China but not Amazon.
“Amazon’s ocean freight services will be far more attractive to Chinese sellers than to American buyers,” Flexport CEO Ryan Petersen wrote on the company blog. “Chinese suppliers would love direct access to Amazon’s vast American customer base. But the idea of buying ocean freight is far less appealing for U.S. companies selling on the Amazon Marketplace.”
A company called Beijing Century Joyo Courier Service Co Ltd doing business under the names Amazon China, Amazon.cn and Amazon Global Logistics China, filed the registration on Nov. 9, it was reviewed and registered on Nov. 13.
Amazon has only just laid the groundwork for its move into the $350 billion a year ocean freight business and it may be a few years yet before operations are actually underway.
But Amazon may have made the move at the right time as ocean freight has become increasingly cheap. As of this January, Flexport said its ocean freight customers were paying less than $1,300 to ship a 40-foot container from Shenzen to Los Angeles.
The low costs are largely owed to the slowdown in demand, and according to Flexport, overinvestment in shipping capacity by ocean carriers has also played into the problem.
Amazon’s latest play comes not long after the company said it would dispatch its own fleet of branded semi-trucks across the U.S. to speed delivery and maybe soon its own jets for air delivery.
Third-party merchants may not be so quick to use Amazon’s freight forwarding services, however, because, as Petersen explained, Amazon would have access to the supplier name and the wholesale price the importer paid—sensitive information companies aren’t likely to be keen to hand over to a major competitor.