Amazon Expands Into Ocean Freight
Move marks online retail giant’s latest step in effort to build out its delivery business
Freighters and cargo containers in Long Beach, Calif. Amazon has helped ship at least 150 containers of goods from China since October.PHOTO: REUTERS
Amazon.com Inc. is taking to the high seas.
The online retail giant has begun handling shipment of goods by ocean to its U.S. warehouses from Chinese merchants selling on its site—taking on a role it previously left to global freight-transportation companies.
The move marks Amazon’s latest step in a multiyear effort to build out its delivery business. The company doesn’t own or operate ships, but is openly acting as a global freight forwarder and third-party logistics provider, categories of companies that book space on ocean vessels and truck goods between ports and warehouses.
Amazon has helped ship at least 150 containers of goods from China since October, according to shipping documents collected at ports of entry that were compiled by Ocean Audit, a company specializing in ocean-freight refund recovery for shippers.
This month, Amazon started posting rates for new services such as sorting, labeling, and trucking shipments that traditionally are handled by global freight companies. The services and rates were posted under the name of its Chinese subsidiary, Beijing Century Joyo Courier Service Co., with Distribution-Publications Inc., a widely used platform for such information.
Amazon declined to comment.
“Amazon has integrated all those services into one basket,” said Steve Ferreira, chief executive of Ocean Audit. Building this type of shipping product offers “a lot of strategic value,” Mr. Ferreira added.Amazon previously had registered itself with a federal agency overseeing ocean transportation, a step toward allowing it to serve as an intermediary for suppliers shipping merchandise in or out of the U.S.
Its new steps to press ahead with ocean-shipping operations move Amazon into direct competition for business that previously was handled by companies including United Parcel Service Inc. and FedEx Corp. It brings Amazon a step further in laying the groundwork for its own plans, outlined in a September story in The Wall Street Journal, to one day haul and deliver packages and cargo for others as well as itself.
Amazon also plans to lease 40 cargo jets and bought branded semi trailers. The company has said that it needs to build out its delivery business to ensure the ability to deliver the growing amount of merchandise its customers order.
The move into ocean freight “is a great example of how Amazon’s expanding its logistical footprint, as well as getting deeper into customers’ supply chains,” said John Haber, chief executive of supply-chain consultancy Spend Management Experts. “This is just another cog in the supply chain that they’re putting under their control, as well as creating new revenue streams.”
According to the documents discovered by Ocean Audit, bills of lading dating back to October list Amazon Logistics as a named party, signaling it has entered into an agreement with another party to provide ocean-freight services. The parties shipping with Amazon primarily appear to be Chinese sellers on its website that use its “Fulfillment by Amazon” service, which allows merchants to store items at Amazon’s warehouses that Amazon then packs and ships when they are sold.
“They’ve made it so easy for these small, medium Chinese suppliers to make it into the supply chain,” adds Mr. Ferreira. Meanwhile, “Amazon is slowly building up a lot of volume.”
