Thursday, March 16, 2017

IS AMAZON A LOGISTICS PROVIDER OR SOMETHING ELSE?

Amazon--being a logistics provider or taking control of its supply chain--something competitors are not doing--to provide new customer experience?

3-15-17 6:14 AM EDT | Email Article
By Laura Stevens and Erica E. Phillips 
Amazon.com Inc. has developed a business to handle shipments for its sellers by land and by sea -- and soon by air.
The Seattle-based retail giant is planning to offer its sellers in China the ability to fly their goods internationally as air cargo, according to an Amazon Logistics site.
The move is an expansion of Amazon's growing business as a global freight forwarder and third-party logistics company, putting it more directly in competition with companies like United Parcel Service Inc. and Deutsche Post AG's DHL. In recent months, Amazon began handling the shipment of goods by ocean to its U.S. warehouses from Chinese merchants selling on its site, taking on a role it had previously left to global freight-transportation companies.
Amazon's entry into the market is "a huge wake-up call to an industry that's been very slow to adopt technology," said Ryan Petersen, chief executive of Flexport Inc., a San Francisco-based startup freight-forwarder that uses software to scrub inefficiencies from the process of arranging international cargo shipments for small- and midsize companies.
Amazon's offerings vary by country, a spokeswoman said. "In China, we offer Amazon Logistics+ to provide operational support to companies of all sizes," she said.
The site outlines a corner of how Amazon is pushing forward in its plans, outlined in a September article in The Wall Street Journal, to one day haul and deliver packages and cargo for others as well as itself.
Amazon has recently detailed plans to build an air cargo hub in the U.S. and has said it would lease 40 cargo jets. The company has said that it needs to build out its delivery business to ensure the ability to deliver the growing amount of merchandise its customers order.
In China, it is unclear whether Amazon would be booking airspace via other carriers or flying its own planes.
The Amazon Logistics site focuses on Chinese customers, who are sellers on its site as well as other businesses. The site says it offers end-to-end one-stop ocean freight services. As for airfreight, "we currently are developing this service and plan to quickly introduce it to a large number of our sellers," the site says.
Amazon can do pickups, warehousing, line-haul transportation, delivery, as well as handle import and export needs, the site says. Primary delivery destinations include the U.S., Europe and Japan.
"Our solution provides a world-class service offering," Amazon says on the site. "As part of one of the world's leading e-commerce companies, our operations team has strong experience in providing professional logistics solutions. With our own strong logistics volume, we can reduce your operational costs."
Many traditional freight forwarders still conduct their business via phone, email or even fax machine, but Amazon's entrance into the sector could drive shippers away from that method in favor of a user-friendly technology platform. Mr. Petersen said at least one of his firm's customers has used Amazon's service -- now a direct competitor to Flexport's technology -- to arrange an ocean freight shipment.
"You can't just put your head down in the sand and pretend that change is not going to come," Mr. Petersen said.
Write to Laura Stevens at laura.stevens@wsj.com and Erica E. Phillips at erica.phillips@wsj.com