Amazon.com, Inc. has made the first step towards becoming a key player in the $350 billion ocean freight business. According to media reports the company’s China subsidiary has received a license in the US to start operating its own freight.
Amazon’s Freight Ambitions
The acquired license is for non-asset owners meaning the company is not looking to purchase or own its own ships. The filling is for Amazon China acquired by the e-commerce behemoth in 2004. With Amazon engaging in international shipping, Chinese factories should be able to ship directly to the US through Amazon.
Transportation of goods from warehouses in China to the US should be much easier and quicker as the company cuts down on middlemen. The service should help sellers in China ship directly from China to the US.
Over the past two years, Amazon has resorted to leasing its own trailers and cargo jets that marked its first step into ocean shipping. Amazon presence in the freight business should have a ripple effect in the industry. Automation of some steps in the business could give the company a competitive edge as it moves to cut on labor costs.
Bolstering logistics Network
A freight service should help bolster the e-commerce giant’s logistics network that is now made up of trucks and possibly planes. Amazon.com, Inc. is also eyeing the use of drones to start making deliveries, awaiting regulatory approval for the same. Bolstering the delivery network is part of the company’s effort to have full control of what happens once a customer clicks the buy button.
Amazon.com, Inc. has been investing heavily on logistics as it moves to affirm its dominance of online transactions. Last year it launched one-hour delivery in more than 20 cities. It has also emerged it is testing its own air cargo shipping network across the US. The expansion is part of an effort that seeks to slash the more than $1 billion the company loses per quarter on shipping costs.