Amazon.com Inc. is making an aggressive expansion into global logistics, pitting their cross-border e-commerce business against Alibaba Group Holding Ltd. in a bid to drive down shipping costs from the world’s biggest manufacturing nations, reports show.
The U.S. company’s roadmap includes building cargo and customs management services from China and India to core markets including Japan, Europe and the United States, according to internal Amazon documents reviewed by Bloomberg dating back to 2013.
It’s a bold plan which pits them directly against Alibaba, who have been spending aggressively to expand their homegrown logistics brand as well as their global logistics network. The cross-border e-commerce market is expected to become a $1 trillion USD industry by 2020.
The project, dubbed ‘Dragon Boat’, would also pose new competition to Amazon’s local shipping counterparts, FedEx and UPS. “Sellers will no longer book with DHL, UPS or Fedex but will book directly with Amazon,” said the 2013 report secured by Bloomberg. “The ease and transparency of this disintermediation will be revolutionary and sellers will flock to FBA given the competitive pricing.”
Amazon’s shipping costs have been rising sharply in the past year, causing concern from investors. Their latest earnings report shows a 37 percent jump in shipping costs year over year.
In a regulatory report cited by Reuters, Amazon registered a Chinese freight forwarding subsidiary, Beijing Century Joyo Courier Service, with China’s transport authorities in 2015, along with a complimentary application to the U.S. Federal Maritime Commission from their China subsidiary in November. Amazon also filed with the Shanghai Shipping Exchange to serve as a shipping broker for a dozen trade routes, including China to Europe and China to the U.S.