Watch out Maersk, here comes Fulfilment by Amazon
You wouldn’t think it would be easy to disrupt an infrastructure business like shipping. Amazon just did.
From Engadget: Virtually every product produced in Asia comes to the US by boat and, as such, oceanic shipping has become a $350 billion industry. Now, Amazon wants a piece of that action. The online mega-retailer’s China division has been awarded clearance by the Federal Maritime Commission to conduct ocean freight services as a licensed Ocean Transportation Intermediary. That means it can legally ship goods for other co
mpanies. The new service, dubbed Fulfillment by Amazon (FBA), won’t do much directly for individual consumers. However, it will allow Amazon’s Chinese partners to more easily and cost-effectively get their products across the Pacific and into said customers waiting hands.
Now, oceanic shipping is already dirt cheap. As Business Insider points out, it only costs about $1300 to ship a 40-foot container holding up to 10,000 units of product — that translates into roughly 13 cents per unit, or just under $10 to deliver a flatscreen TV. The biggest component of that cost comes from labor: transferring containers from dock to ship to dock, ensuring that all the shipments are properly accounted for, and that shipments comply with all local tariffs and laws. Amazon reportedly figures that it can apply the same automation techniques (both hardware- and software-based) found in its warehouses to this process and reduce costs even further. Combined with the company’s fledgling aircraft fleet, this could prove a very lucrative new business for Amazon.