Sectors

Amazon is venturing into freight shipping business

January 15
5:54 PM 2016

The United States biggest online retailer, Amazon starts the New Year with another additional service, oceanic freight shipping. The company through its China division just awarded with a clearance from the Federal Maritime Commission to conduct said service under the Ocean Transportation Intermediary licensed.

Engadget reported that the additional service will be handled by its new, Fulfillment by Amazon fleet which will be operating to transport goods mainly from China to the United States. Through this new service, although it will not be affecting its end users directly, Amazon will be able to control more in terms of the shipping cost and eventually reduce its overall overhead cost.

The shipping license was applied by Amazon using its subsidiary company, Beijing Century Joyo Courier Service Co.. It was acquired by Amazon in 2004 and its venture's insurance started since September last year.

The news was first reported by a US freight forwarding company, Flexport which discovered Amazon application and published regarding the possibilities in its blog according to Fortune.

Although it is still unsure regarding Amazon's plan to further enhance its new license, there is however a possibility that Amazon could also rival other logistic solution company such as FedEx. This is because there is also a report that Amazon is currently applying for an air service license too.

However, considering current freight shipping industry situation, Amazon is less likely to be operating its own ship but rather the company will be involved with managing the shipping process. The service is expected to be beneficial for Amazon since the company has the capacity for software automation and it is reflected in the company's warehouse system.

Amazon is expected to be able to further reduce the price of buying its product and also delivering the products that it is expected to bring more customers to the company. According to Ryan Peterson, CEO of Flexport, "You'd be buying directly from a factory in China. The goods could be put in an ocean container and it would take four to five weeks for them to arrive." Besides that, he also added that the price that the customer will have to pay soon "will be almost free, it's so cheap" as told by USA Today.

The filing done by Amazon is just the first step in a series of steps that the company needs to take before the service could materialize. Currently, no representative from Amazon had released any statement regarding the latest news.

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