A subsidiary of e-commerce company Amazon recently registered
as a foreign-owned non-vessel-operating common carrier with the U.S.
Federal Maritime Commission, a move that has sparked further
speculation that the online retailer is expanding into the
transportation business.
as a foreign-owned non-vessel-operating common carrier with the U.S.
Federal Maritime Commission, a move that has sparked further
speculation that the online retailer is expanding into the
transportation business.
Beijing Century Joyo Courier Service Co., Ltd. filed for
registration with the FMC on Nov. 9, 2015, and was registered
officially on Nov. 13, according to Sandra Kusumoto and Clifford
Johnson, director and deputy director of the Bureau of Certification
and Licensing at the FMC, respectively.
A 2004 filing with the
U.S. Securities and Exchange Commission indicates that Beijing
Century Joyo Courier was a subsidiary of Joyo.com, a Chinese Internet
company that Amazon acquired that year in a transaction valued at $75
million.
registration with the FMC on Nov. 9, 2015, and was registered
officially on Nov. 13, according to Sandra Kusumoto and Clifford
Johnson, director and deputy director of the Bureau of Certification
and Licensing at the FMC, respectively.
A 2004 filing with the
U.S. Securities and Exchange Commission indicates that Beijing
Century Joyo Courier was a subsidiary of Joyo.com, a Chinese Internet
company that Amazon acquired that year in a transaction valued at $75
million.
According to its tariff, available on the website of
Distribution Publication Inc., Beijing Century Joyo Courier’s scope
of operations is for cargo moving between the United States and
“worldwide ports and points.” Its trade names include Amazon
China, Amazon Global Logistics China and Amazon.cn, the successor to
Joyo.com
Distribution Publication Inc., Beijing Century Joyo Courier’s scope
of operations is for cargo moving between the United States and
“worldwide ports and points.” Its trade names include Amazon
China, Amazon Global Logistics China and Amazon.cn, the successor to
Joyo.com
Amazon has kept its cards close to the vest about its
intentions, but Ryan Petersen, chief executive officer of the San
Francisco-based freight forwarder and NVO Flexport, wrote in a blog
entry that “Amazon China now has the appropriate paperwork to
provide ocean freight services for other companies. This is Amazon’s
first step toward entering the $350 billion ocean freight
market.”
Petersen’s blog and Twitter posts about the Amazon
unit set off a rash of stories in the business press within hours.
intentions, but Ryan Petersen, chief executive officer of the San
Francisco-based freight forwarder and NVO Flexport, wrote in a blog
entry that “Amazon China now has the appropriate paperwork to
provide ocean freight services for other companies. This is Amazon’s
first step toward entering the $350 billion ocean freight
market.”
Petersen’s blog and Twitter posts about the Amazon
unit set off a rash of stories in the business press within hours.
News of the NVO registration had come on the heels of other
reports about Amazon expanding into the transportation business. The
Seattle Times reported in December that Amazon was in talks to
lease Boeing jets to launch its own air cargo business, and in
January it purchased the remaining 75 percent of the French package
delivery company Colis Privé.
reports about Amazon expanding into the transportation business. The
Seattle Times reported in December that Amazon was in talks to
lease Boeing jets to launch its own air cargo business, and in
January it purchased the remaining 75 percent of the French package
delivery company Colis Privé.
Petersen called the registration with the FMC “a smart and
long overdue move for the company. By offering ocean freight
services, Fulfillment by Amazon (FBA) will make it easier for its
customers to move goods into the company’s logistics network.”
long overdue move for the company. By offering ocean freight
services, Fulfillment by Amazon (FBA) will make it easier for its
customers to move goods into the company’s logistics network.”
Carlos Rodriguez, a partner at the law firm Husch Blackwell,
said the registration of Beijing Century Joyo Courier “may be the
first step of others to come in obtaining a full U.S. operation”
and that Amazon could create or acquire a licensed OTI to handle
cargo once it arrives in the United States.
Federal regulation
(Title 46 Subpart A §515.3) states, “Registered NVOCCs must
utilize only licensed ocean transportation intermediaries to provide
NVOCC services in the United States. In the United States, only
licensed OTIs may act as agents to provide OTI services for
registered NVOCCs.”
“Why would they want to give up the other
part of the profit stream at the receiving end?” Rodriguez asked.
said the registration of Beijing Century Joyo Courier “may be the
first step of others to come in obtaining a full U.S. operation”
and that Amazon could create or acquire a licensed OTI to handle
cargo once it arrives in the United States.
Federal regulation
(Title 46 Subpart A §515.3) states, “Registered NVOCCs must
utilize only licensed ocean transportation intermediaries to provide
NVOCC services in the United States. In the United States, only
licensed OTIs may act as agents to provide OTI services for
registered NVOCCs.”
“Why would they want to give up the other
part of the profit stream at the receiving end?” Rodriguez asked.
Amazon could also become a licensed customs broker, though he
said that is not necessary since companies sometimes chose to focus
solely on transportation and pay brokerage.
said that is not necessary since companies sometimes chose to focus
solely on transportation and pay brokerage.
Petersen said, “Amazon’s ocean freight services will be far
more attractive to Chinese sellers than to American buyers. Chinese
suppliers would love direct access to Amazon’s vast American
customer base. But the idea of buying ocean freight is far less
appealing for U.S. companies selling on the Amazon Marketplace.”
more attractive to Chinese sellers than to American buyers. Chinese
suppliers would love direct access to Amazon’s vast American
customer base. But the idea of buying ocean freight is far less
appealing for U.S. companies selling on the Amazon Marketplace.”
Amazon Marketplace is the service that Amazon offers to third
parties to sell their merchandise though its website. Amazon’s 2014
annual report said “40 percent of our units are sold by more than
two million third party sellers worldwide,” and promises to
“further globalize Marketplace, we’re now helping sellers in each
of our geographies—and in countries where we don’t have a
presence—reach out to our customers in countries outside their home
geographies. We hosted merchants from more than 100 different
countries last year, and helped them connect with customers in 185
nations.”
parties to sell their merchandise though its website. Amazon’s 2014
annual report said “40 percent of our units are sold by more than
two million third party sellers worldwide,” and promises to
“further globalize Marketplace, we’re now helping sellers in each
of our geographies—and in countries where we don’t have a
presence—reach out to our customers in countries outside their home
geographies. We hosted merchants from more than 100 different
countries last year, and helped them connect with customers in 185
nations.”
“They are going to offer their service to other companies,
otherwise they don’t need the NVOCC registration,” Peterson said.
“They can ship their own cargo any time and sign contracts directly
with steamship lines. To have an NVOCC license, they have aspirations
or there is some project, somewhere in the company, to offer that
service to third parties.”
otherwise they don’t need the NVOCC registration,” Peterson said.
“They can ship their own cargo any time and sign contracts directly
with steamship lines. To have an NVOCC license, they have aspirations
or there is some project, somewhere in the company, to offer that
service to third parties.”
Moving cargo for other companies could help Amazon drive down
shipping costs further by becoming an even larger shipper.
shipping costs further by becoming an even larger shipper.
“Amazon has scale and I think the ocean carriers will see
this as a great opportunity and will be happy to give Amazon good
pricing,” Petersen said. “I think other forwarders who provide
freight services to their end customers, especially the ones that are
focused on small and medium size businesses, will be terrified and
will not want to work with Amazon, because why should you come after
this company that is coming after your market?”
this as a great opportunity and will be happy to give Amazon good
pricing,” Petersen said. “I think other forwarders who provide
freight services to their end customers, especially the ones that are
focused on small and medium size businesses, will be terrified and
will not want to work with Amazon, because why should you come after
this company that is coming after your market?”
However, he suggested some American companies might be
uncomfortable doing business with Beijing Century Joyo Courier.
Amazon could build a so-called “Chinese wall” between the NVO and
the rest of the company to protect sensitive information about
sourcing and pricing. FedEx, UPS and myriad other shipping companies
might have similar information, but “don’t have a store where
they sell the same products,” he noted.
uncomfortable doing business with Beijing Century Joyo Courier.
Amazon could build a so-called “Chinese wall” between the NVO and
the rest of the company to protect sensitive information about
sourcing and pricing. FedEx, UPS and myriad other shipping companies
might have similar information, but “don’t have a store where
they sell the same products,” he noted.
“Amazon’s ocean freight offering could be a huge hit for
Chinese merchants. But I predict that Amazon will fail to win
traction with U.S. brands. American companies will simply not be
willing to turn over such sensitive supply chain data to a major
competitor and channel partner. Amazon’s reputation for ruthless
competition and its desire to dominate every market on planet earth
will make it difficult to convince U.S. companies to move their
international freight onto this new platform when it launches,”
Petersen wrote.
Chinese merchants. But I predict that Amazon will fail to win
traction with U.S. brands. American companies will simply not be
willing to turn over such sensitive supply chain data to a major
competitor and channel partner. Amazon’s reputation for ruthless
competition and its desire to dominate every market on planet earth
will make it difficult to convince U.S. companies to move their
international freight onto this new platform when it launches,”
Petersen wrote.
But Edward D. Greenberg, general and transportation counsel for
the National Customs Brokers and Forwarders Association of America,
said the confidentiality of shipper data is protected by law.
James
Devine, chief executive officer of Distribution Publications, said it
is not uncommon for manufacturing and trading companies, including
many in the Far East, to set up their own NVOs to build volume and
help lower their own ocean freight costs and as a service to
affiliates or suppliers.
“I think it is going to be far more
appealing to an overseas company and what we are probably seeing is
Amazon is looking to make it easier for foreign companies to sell
through their platform. I see that as a threat to their merchant
program,” Petersen said.
the National Customs Brokers and Forwarders Association of America,
said the confidentiality of shipper data is protected by law.
James
Devine, chief executive officer of Distribution Publications, said it
is not uncommon for manufacturing and trading companies, including
many in the Far East, to set up their own NVOs to build volume and
help lower their own ocean freight costs and as a service to
affiliates or suppliers.
“I think it is going to be far more
appealing to an overseas company and what we are probably seeing is
Amazon is looking to make it easier for foreign companies to sell
through their platform. I see that as a threat to their merchant
program,” Petersen said.
In an interview, Petersen noted his own company, Flexport, is
“built around technology… This Amazon thing is not threatening to
us, it’s just interesting and kind of cool. We’re technologists
so we like to see other technology companies getting into the space.”
“built around technology… This Amazon thing is not threatening to
us, it’s just interesting and kind of cool. We’re technologists
so we like to see other technology companies getting into the space.”
In his blog, Petersen speculated that the NVO filing “may be
Amazon’s answer to Wish,” a mobile e-commerce app.
Amazon’s answer to Wish,” a mobile e-commerce app.
Petersen wrote he thinks Amazon should do well because with
ocean freight costs being low, “a considerable portion of logistics
costs come through labor costs—particularly compliance and
coordination of cargo handoffs between different players in the
chain.
ocean freight costs being low, “a considerable portion of logistics
costs come through labor costs—particularly compliance and
coordination of cargo handoffs between different players in the
chain.
“Automation, something no traditional freight forwarding
company can do even
company can do even
1 percent as well as Amazon can, becomes the key competitive
advantage over
advantage over
legacy freight forwarders,” he argued. “By using software to
eliminate additional transaction costs associated with government
filings, status updates, pricing, booking and more, Amazon will be
able to cut their costs significantly. At the same time, fulfilling
products directly from China to consumers in the U.S. will cut
handling costs at U.S. warehouses.”
eliminate additional transaction costs associated with government
filings, status updates, pricing, booking and more, Amazon will be
able to cut their costs significantly. At the same time, fulfilling
products directly from China to consumers in the U.S. will cut
handling costs at U.S. warehouses.”
