by Viraj Shah
Global shipment transportation is an industry most vital to trade, but often overlooked. In a world where technology is growing rapidly every day, it is difficult to believe that cargo ships can take months to reach their destination. While many big companies now require their ships to send location information regularly, the chances of the ships ‘going dark’ in the ocean are still very high. Amazon, the Seattle based e-commerce giant, is looking to change the dynamics of the game by entering the trillion-dollar industry itself.
Amazon makes a grand entry
Amazon was exclusively dependent on outsourced services for carrying their cargo from China to US. Now, the company has ventured out on its own and is focusing on taking control of its own business. About 150 containers have already been shipped from China to the US by Amazon’s new ocean freight service. The ocean freight business is a trillion-dollar industry and forms the backbone of globalized trade. It is only recently that the industry entered a digitalized era.
— Delmar International (@DelmarCargo) January 6, 2017
A few startups have already started to make their mark in this sector. One such example is Freightos. This service allows users to book online and works quite like Expedia does for travel accommodations. It is an online marketplace based in Israel and started by Zvi Schreiber. With a few innovative startups and Amazon interested in this sector, it will certainly see more growth soon.
Why Amazon? Why Now?
Amazon is currently focusing on its multi-year plan of developing a solid delivery chain for its e-commerce business. It has already started its delivery business on and with a new ocean freight chain; it will get more control over its cargo. Amazon has also started posting rates for trucking, labeling and sorting shipments. As per Wall Street Journal, Beijing Century Joyo Courier Service Co., Amazon’s Chinese subsidiary has started posting rates for these new services. Similar activities are noticed with Distribution-Publications Inc.
— TRANSPOREON Group US (@TransporeonUS) January 5, 2017
It is important to note that Amazon hasn’t bought any ships. Instead, it is simply reserving space on different ships. Currently, Amazon is playing the role of a logistics organizer and freight operator. Amazon’s freight business is also growing by the day. It has its own fleet of delivery trucks and has cargo planes. It is already experimenting with drone delivery. Following the footsteps of Amazon, Alibaba tied with Maersk Line and has adopted a similar approach to providing space on carrier ships.
— Lynair Logistics (@Lynair_) January 31, 2017
Will it cut down jobs?
Amazon’s new venture could lead to loss of jobs as well. Though, not immediately but the company Now, there seems no urgent need to cut down jobs in Amazon but it may not take long for the organization to focus on self-guided freight ships. The idea is novel and will also be easier to handle as there is no traffic or risk of collisions. However, even if Amazon does opt for such transport, it may not be able to give up completely, as risks of hijacking are still not mitigated. It would take a smarter and more widely recognized technology for Amazon to keep track of the ocean and find ways to make their freight safer. Though a few jobs could be at risk, it is not expected that Amazon will focus on man-less freight transport as of now due to the massive risks involved.
— TRANSPOREON Group US (@TransporeonUS) January 27, 2017
The job losses will not be immediately. However, they cannot be ruled out in future.