Amazon’s China logistics push to pile pressure on rival shippers

10 April 2017

Amazon has proven adept at growing businesses from scratch and by stealth. Now it is taking aim at the $8tn global logistics industry, by quietly nurturing a programme in China through which any wholesaler can use it to ship goods around the world by sea, land or air.

The service, called Amazon Logistics+, has expanded greatly in recent months to include cross-border air transportation, as well as packaging, warehousing, customs and handling services. Logistics analysts say the new offering will increase pressure on established shippers such as UPS, FedEx and DHL — because anyone in China can use the service, not just Amazon sellers. Amazon already runs a global retail empire and counts logistics as one of the key pillars of its business. Last year, one in six dollars of Amazon’s revenue came from its logistics business, which provides warehousing and shipping services to its sellers. It first entered China more than a decade ago, but largely missed out on the booming ecommerce market as it was overtaken by homegrown champions such as Alibaba and JD.com. But now the company may have found a way back in. “They feel that with the volume of goods they control, they can actually move the goods more efficiently than the others who are doing it,” says John Manners-Bell, head of Transport Intelligence, a logistics consultancy. “A new entrant with a focus on technology can disrupt the market quite significantly.” High quality global journalism requires investment.

Although the programme may be small, it is sending ripples through the global logistics industry. “They [Amazon] are only a bit player at the moment but they could come into competition with FedEx, UPS and DHL quite quickly,” says Mr Manners-Bell. “There’s a lot of technology that can make this industry more efficient.” Many of the world’s biggest logistics companies count Amazon as both a customer and, increasingly, a competitor. Until recently, manufacturers selling goods through Amazon had to deliver those goods directly to Amazon warehouses. Now Amazon Logistics+ will do that for them.

The company’s expansion in China follows other logistics investments in the US, where Amazon has leased its own air cargo fleet and purchased its own truck trailers. The company has also hired several logistics industry veterans, and it obtained a China shipping licence last year.

SOURCE: www.ft.com