If readers have been keeping-up with our prior blog commentaries as well as prior predictions related to Amazon, this week’s announcement should not be of any surprise.  fba_sized

That announcement is that Amazon will soon deploy a set of transportation and logistics services to allow China based manufacturers and sellers to ship their inventories of products to global destinations utilizing ocean container, air freight, or inter-modal mechanisms.  Mainstream media outlets are now running with the story byline that Amazon is now becoming a direct competition with that of FedEx, DHL, and UPS in certain segments.  This blog made that prediction in late 2015, and market realities for this new industry disruptor are now beginning to sink in.

The Amazon Logistics web site indicates that Chinese customers who are B2C sellers on the Fulfilled by Amazon platform, as well as B2B sellers to other businesses can arrange pickups, line-haul transportation, export, and import, as well as warehousing with Amazon Logistics. Primary destinations being supported include the United States, Japan, and Europe.

In a Supply Chain Matters blog commentary in October 2015, this Editor noted: “A final note: Yes, there are realities that nationwide parcel delivery networks require large asset investments, but disruptors such as Amazon, Google, Lyft and Uber strive to challenge any status-quo. From this author’s view: The door is now open for alternatives” In December of that year, we shared other evidence of the online retailer’s unfolding expansion of customer fulfillment capabilities.

Because this is indeed Amazon, there is little doubt that Amazon Logistics services will be accompanied by lots of advanced technology, and that is the other wake-up call, for current third-party logistics providers (3PL’s) who will now have to deal with competition from Amazon in certain segments. Today’s reporting by The Wall Street Journal quotes a logistics services firm executive as indicating: “You can’t just put your head in the sand and pretend that change is not going to come.” Obviously, well stated.

Within our 2017 Predictions for Industry and Global Supply Chains, (Available for complimentary downloading in our Research Center) we called for even more transportation industry global turbulence. Already, are reports indicating that ocean container transport spot rates are spiking once again in certain lane segments, while 3PL’s are raising rates and services fees as-well. Ocean container shipping line leader Maersk Line has announced plans to offer broader logistics services for land transport and offer augmented services for shipping customers, potentially disrupting existing transport broker services models. As opined in a prior guest point-of-view posting from SimpliShip co-founder Cory Margand, new technology entrants are offering SaaS (Software-as-a-Service) technology and marketplace opportunities as a means for both the customer and the broker to create more efficient solutions for transportation and logistics needs that large as well as smaller businesses and shippers can take advantage of. There is the reminder that historically, both carriers and brokers have a more than outdated tech infrastructure especially from the customer’s perspective, with heavy reliance on static databases, EDI, or email/phone calls.

Rest assured, Amazon is not the only disruptor since Alibaba, Flipkart and others are well on their journeys to offer more shipper and customer-centric logistics, financial and B2C/B2B customer fulfillment services enabled by advanced technology and smarter data.

A traditional industry segment is once again undergoing forces of disruption, with more to come.

Pay close attention, be prepared and continue do your homework.

Bob Ferrari

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