Tuesday, March 15, 2016

Is Amazon entering ocean transportation?

I have always claimed that NVOCCs and 3P Logistics operators will never venture seriously into ship ownership, particularly when there is so much idle shipping capacity around, and when freight rates have hit rock bottom. And here comes a gigantic e-commerce retailer, Amazon, aggressively bypassing them, investing heavily in its own transport infrastructure (road, rail, aviation, ships). Apparently for Amazon, (higher) transport costs and economies of scale (ensured by 3PLs) are secondary considerations, and what really matters is quality of service; i.e. distribution times which it could better guarantee and control by owning its own transport means.  

Amazon’s leasing of 20 B747 jumbo jets gives the jitters to UPS and Fedex, in spite of the gentle compliments and loyalty promises. And although the lease is intended principally for the vast internal US market, in my view it is only a matter of time before Amazon expands to global air transport operations. 

Moreover, Amazon’s acquisition of the French Colis PrivĂ© points clearly to the company's European ‘aspirations’, while its Chinese subsidiary has already received US authorizations to run ships to the US coasts! 

These are all game changers and let us all keep a good eye on them. HH