Amazon Expands Into Ocean Freight
Amazon.com has begun shipping products from its Chinese merchant partners to its U.S. warehouses via ocean freighters, according to The Wall Street Journal. In this arrangement, Amazon acts a freight forwarder, where it doesn’t own ships or employ crews, but acts as a logistics provider and organizer for carriers that do own those vessels. It books cargo space on ocean-faring ships that will transport goods from those ships to warehouses and vice versa. Other freight forwarders include FedEx and UPS, for example.Amazon has so far acted as a freight forwarder for at least 150 containers of goods imported from China, over a period dating back to October.
Total Retail's Take: What does this mean for Amazon? Simply put, it gives the company another leg up on the competition. Owning more of its logistics business is a key way for Amazon to help control costs. The retailer now owns possibly the largest percentage of online and overall consumer goods sales, especially in the U.S., so it makes sense for it to take on responsibility for even bigger chunks of the logistics supply chain. It's also not the first time Amazon has entered into the logistics business. Previously, it revealed plans to handle more air transport for goods sold via its website through a leasing agreement with Boeing for cargo jets dubbed Amazon Prime Air. Amazon also handles more of the last-mile delivery process on its own via contracted courier services in cities where it offers same-day and Prime Now two-hour shipping.