Sunday, April 3, 2016

A business model for Amazon’s Containerships

Just a few posts below, we had predicted that, after entering aviation, it would be a matter of time before Jeff Bezos enters also into ocean transportation. And this time has been quite short.

Amazon has announced its intention to invest in containerships. Its business model is still being thought out, but here is how I foresee a possible scenario:

The company will not be running liner services, being itself both the carrier and the shipper. She will load in Asia with all sorts of container cargo, from all sorts of possible ports, until the ship is full. Assuming a sufficient number of ships is engaged to serve this model, time should not be of essence, for there wouldn’t be a specific consignee requiring the goods at the other end. Amazon would be just warehousing at sea. In this sense, economic slow-steaming would be the preferred option, rather than express services, as Bezos seems to be considering too.

Once the ship arrives, she could be conveniently anchored offshore, sufficiently close to dense consumption centers, such as Los Angeles or Hamburg (close shoring). Goods would be delivered directly to the consumer by drones, thus bypassing ports, tracking, and land-warehousing. A truly green supply chain! The same, hopefully, on the way back to Asia.

The choice of ship would be Amazon’s biggest challenge, and here your guess is as good as mine. Constraints in this regard are: stowage planning; required onboard gear; sufficient deck space for container stripping operations; and sufficient and suitable below-deck space for safe and weatherproof storage of unpackaged goods. With these in mind, and at such a preliminary state of affairs, a “box-shaped” multipurpose vessel (Figure) of about 2000 TEU jumps immediately to mind, and this might not be such a bad idea after all.

Futuristic? Yes. Could it be done? I believe so. When there is a will there is a way. Jeff Bezos is known not only for his innovations but also for his determination to see them through. Time will tell. HH