Amazon Is Expanding Its Shipping Infrastructure to Sea
Amazon has registered for a license to ship packages from China by ocean freight.
The company's Chinese subsidiary has registered for a US license for ocean freight forwarding from the Federal Maritime Commission (FMC), which would mean the company is cleared to deliver products for other companies.
Motherboard first reported in November that Amazon was rumored to have launched a secretive air cargo operation to ship its own goods. Since then, the company has been in talks to purchase 20 new jets for the operation and started flights in the UK. Ocean freight marks yet another expansion into the transport industry.
Ryan Petersen, CEO of San Francisco logistics company Flexport, came across the ocean freight forwarding filing on Wednesday night, but the FMC website where he discovered it does not show the date Amazon registered. Amazon declined to comment on the development.
The license is explicitly for Amazon China to forward products for other companies, Peterson said, suggesting the retail giant could cut out the middle man—companies that buy products from China and sell them in the US—and send products from China directly to its customers.
"This is a real shot across the bow to Amazon's own merchants," he told Motherboard. "Amazon is taking steps to take them out of the loop and allow Chinese factories to ship directly to their customers without needing a middle man."
Amazon purchased Chinese retail company JOYO in 2004, which is listed on the official FMC registry as Beijing Century JOYO Courier Service Co. Ltd, in addition to the trade name Amazon China.
Brandon Fried, Executive Director of the Airforwarders Association, said the move into ocean transportation is in line with Amazon's recent focus on increasing its control over shipping and logistics.
"If the forwarder isn't delivering a return on the investment, Amazon can derive cost efficiency on the process by handling it themselves and they'll cut out the expense," he said. "If they have the necessary people it will be successful, and it won't be that long before it's underway."
The bottom line is an ever-looming incentive to invest in more efficient logistics, but the move also gives Amazon more control over its operations.
"This is probably not just to cut costs," Fried said. "It's also an initiative to control the movement and put it under their own wing and make sure they have much more visibility in the process."