Amazon’s entry into global logistics leaves competitors hot under the collar

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In the past few weeks, Amazon’s latest market disruption plans have been creating a media storm. First announced by Bloomberg, the news that Amazon really does plan to build its own logistics and shipping arm, internally dubbed ‘Dragon Boat’, is already creating images of a fire-breathing creature afloat in international waters. At least that is how existing operators in the supply chain may be feeling.

Reportedly, the Dragon Boat project, which was first outlined internally by Amazon in 2013, involves the launch of a new ‘Global Supply Chain by Amazon,’ which could appear as soon as this year. It would compete directly with businesses such as FedEx and UPS, and would ultimately cut out many other intermediary providers.

Both Amazon and Alibaba appear to be competing for dominance over the ever growing cross-border e-commerce market, which is expected to grow into an industry worth more than US$1tn, serving 900 million shoppers by 2020. Many watching Amazon’s public moves in the past few years have conjectured that such a plan was in the works.

In December 2015, it was reported that Amazon purchased thousands of tractor-trailers, purportedly to ship merchandise between its distribution facilities, but analysts speculated it was a step in building a bigger logistics platform. Then later in December, it was reported that Amazon was in talks with Boeing to acquire a fleet of planes to help deliver packages to customers in the USA, and last month, Amazon received its Chinese shipping license, allowing it to act as a wholesaler for ocean container shipping.

An Amazon global delivery network could control the flow of goods from factories in countries like India and China all the way to delivery in the USA, Europe and other countries. In its project business model, Amazon locates itself at the center of the global logistics market, involving not just giants like FedEx and UPS, but also scores of smaller and mid-size intermediaries currently handling cargo and the documentation associated with cross-border e-commerce.

Amazon reportedly wants to bypass these middlemen, building inventory from merchants around the globe, then using its size and brand power to buy space on trucks, planes and ships at reduced rates. Merchants would be able to book transportation space online or by mobile devices, creating what Amazon calls ‘one click-ship for seamless international trade and shipping.’

Information about Amazon’s Dragon Boat plan, along with other global shipping/logistics ecosystem developments, will be featured at the upcoming PostalVision 2020 event to be held on March 15-16, 2016, just outside Washington DC, in the USA.

Cooper Smith, senior research analyst for Business Insider Intelligence (BII), will provide a data-driven presentation, The Everything Shipper: Amazon and the New Age of Delivery, which will focus on what Amazon is doing in this new age of retail and delivery, and how it will disrupt legacy shippers. Cooper will also touch on other vertical activity in this space, including moves by giant retailers such as Walmart and Alibaba.

Kathleen Siviter currently serves as director – community and brand development, for PostalVision 2020, in addition to her role as president, Postal Consulting Services.

Siviter has worked in the postal industry for more than 30 years, starting with 11 years at the United States Postal Service (USPS), then transitioning to a variety of industry roles including vice president of the Association for Postal Commerce (PostCom), before starting her own consulting business in 2000. For the past 15 years, she has provided consulting services to PostCom and other mailing industry associations, as well as mailing software vendors, service providers and mail owners.

March 4, 2016

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