Amazon China Earns Its Ocean Shipping License
Amazon may be getting into the ocean shipping business.
The company’s China subsidiary has applied for and received a U.S. maritime freight forwarding license. Freight forwarders don’t operate ships themselves, but instead organize shipping and handle the paperwork.
The license was first discovered by Flexport, a U.S. freight forwarding company and posted on its blog. The news comes on the heels of reports last month that Amazon was considering leasing a fleet of cargo jets to create an air shipping service.
The latest about the maritime license serves as another confirmation of the e-commerce giant’s ambitions to own more of the delivery process. It could help the company cut shipping costs or open a huge new business that would compete against FedEx and UPS.
The information about the license comes from a Federal Maritime Commission database that lists Amazon Chia subsidiary, Beijing Century Joyo Courier Service Co, as receiving approval. The venture’s insurance bond was effective Sept. 15 of last year.
Amazon (AMZN) bought Joyo, then an online bookseller, way back in 2004, in one of its first ventures into the Chinese market.
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Amazon’s potential push into the global ocean shipping market comes at a time of chronic, seemingly intractable oversupply in the industry. Currently, ocean shipping is a broadly unprofitable business.
But as a freight forwarder, Amazon wouldn’t be putting its own ships in the water. Instead, it would be selling existing capacity, and managing the shipping process. An international Amazon freight service could oversee a products’ journey from ramp the at a Chinese factory all the way to an American warehouse.
As Flexport CEO Ryan Petersen points out, this could be a perfect business for Amazon, thanks to the company’s legendary ability to master software automation that could reduce the cost of everything from customs clearance to inventory tracking.
For more on Amazon’s quest for total shipping domination, watch:
Petersen also has a compelling explanation of why the license sits with Amazon China, not the U.S. organization. American importers using Amazon’s shipping service would have to reveal their suppliers and costs, which they may be unwilling to do for fear that Amazon would use that information to better compete with them.
In contrast, Chinese producers have nothing to hide from the company giving them access to their biggest market.
That points to either a limitation in Amazon’s logistics ambitions—or a foreboding shadow over the many importers that make big money on the website. Some sellers will never be comfortable with giving Amazon total access to their supply chain. And because Amazon’s freight services wouldn’t need to deliver big (read: any) profits, the Chinese producers willing to use it could get a huge boost. If Amazon can connect those producers directly to the American market, while giving them cheaper freight rates than American importers can access, even major brands that source from China could end up all wet.