Amazon subsidiary to provide ocean freight services
15 Jan 2016
A Chinese subsidiary of Amazon.com has registered to offer ocean freight services, a move that could help cut costs for Chinese companies looking to move products to US markets, and give the retailer greater control over end-to-end delivery.
According to a listing of "Ocean Transportation Intermediaries" by the US Federal Maritime Commission, a business named Beijing Century Joyo Courier Service Co Ltd, with the trade names Amazon China, Amazon.CN and Amazon Global Logistics China, has been registered as an ocean freight services provider.
In a 2004 regulatory filing, Amazon said it had entered into a definitive agreement for the acquisition of Joyo.com, a British Virgin Islands company, which was also the operator of joyo.com and joyo.com.cn websites in cooperation with Chinese subsidiaries and affiliates.
The Joyo.com websites are the largest online retailers of books, music and videos in China, according to Amazon's statement at the time.
The listing with FMC, first noted by Flexport, a logistics firm in San Francisco, could pave the way for Amazon to offer ocean freight services for other companies, especially to Chinese companies, wrote Ryan Petersen, CEO of Flexport in a blog post.
According to the FMC, Amazon China had placed the registration request on 9 November. The request was reviewed and registered and on 13 November, and was the first registration of the entity, it said.
According to Petersen, Amazon's third-party merchants were not likely to use its shipping as it would expose key data like wholesale pricing and supplier names to a rival.
With its new status as a freight forwarder, or "non-vessel operating common carrier," Amazon, the world's largest online retailer, would gain a foothold in the $350-billion a year ocean freight business, it would not operate ships but subcontract that work.
Amazon is already seeking a deal to lease 20 jets to start an air-delivery service in the US, the Seattle Times reported last year.
The retailer had bought truck trailers to add shipping capacity and started a programme last year that uses a fleet of on-demand drivers to deliver packages.
"It has more and more control over the supply chain of their business and it gives them the ability to squeeze (costs) even further," said Satish Jindel, a logistics consultant and president of SJ Consulting Group, Reuters reported.
