E-commerce giant Amazon.com Inc. referred to itself for the first time as a “transportation service provider” in its annual 10-K report submitted to the United States Securities and Exchange Commission.
E-commerce giant Amazon may have on Friday given its strongest indication yet that it plans to enter the freight transportation business as a provider of services to other shippers.
In its annual 10-K report submitted to the United States Securities and Exchange Commission, Amazon.com Inc. for the first time ever referred to itself as a “transportation service provider,” further fueling recent speculation the company is looking to get into the freight game for themselves.
Up to this point, Amazon has secured trucking and warehouse capacity only to supplement its own shipping needs and reduce costs, but recent moves suggest it may begin providing those services to other companies. Last month, news broke that Beijing Century Joyo Courier Service Co., Ltd., an Amazon subsidiary, had registered as a foreign-owned NVOCC with the U.S. Federal Maritime Commission, and several media outlets reported in December the company was in talks to lease a fleet of Boeing jets in order to launch its own air cargo business.
In the SEC filing, Amazon also referred to “companies that provide fulfillment and logistics services for themselves or for third parties, whether online or offline” as competitors, also a first, but company executives are downplaying the significance of these developments.
Chief Financial Officer Brian Olsavsky said on an earnings conference call Thursday the company does not intend to go head-to-head with its logistics providers.
“In order to properly serve our customers at peak, we’ve needed to add more of our own logistics to supplement our existing partners,” said Olsaveky. “That’s not meant to replace them, and those carriers are no longer able to handle all of our capacity that we need at peak. They have been, and continue to be great partners, and we look forward to working with them in the future.”
E-commerce companies like Amazon have seen their business explode over the last few years, culminating with record numbers this past holiday shopping season.
Amazon last Thursday reported its fourth quarter 2015 net earnings shot up over 125 percent to $482 million compared to the fourth quarter of 2014, its largest quarterly profit in company history and its third consecutive quarter in the black.
Chinese competitor Alibaba Group Holding Limited said Thursday its Q4 2015 net profit more than doubled to 12.5 billion yuan (U.S. $1.9 billion) on revenues that rose 32 percent year-over-year to $5.3 billion.
Shipping expenses at Amazon, however, increased 37 percent to $4.17 billion for the quarter and shipping costs as a percentage of overall sales jumped to 12.5 percent compared to 10.9 percent in the same 2014 period.
The online retailer’s expected foray into the transportation business could potentially make it more competitive by allowing Amazon to reduce shipping costs as well as further leverage those assets in order to create additional revenue.
Amazon the ‘transportation service provider’?
