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Amazon Is Expanding Into The World Of Ocean Freight Shipping

Move seen as a boon to Chinese sellers

[Photo: Flickr user Gabriele Diwald]

Amazon's ongoing efforts to use drones to deliver packages have made headlines over the past year, but the company has also taken steps to move goods via much more traditional means: ocean freight shipping. As Flexport reports, Amazon’s Chinese arm, Amazon China, has been granted a license by the Federal Maritime Commission to become an ocean freight forwarder.

Oceans freighters—those football-field-size cargo ships that ferry 40-foot containers to and from major ports around the world—can hold thousands and thousands of individual items, Flexport notes. The cost of shipping those items over the ocean is incredibly small, at around $1,300 per container, so shipping a television, for example, from China to America could cost as little as $10; shipping the same television by air could cost hundreds of dollars.

Of course, Amazon has been receiving goods for its U.S. warehouses by ocean freight for years using third-party shippers, so why does the company now want to branch out into ocean freight shipping itself? Owning a shipping license will help Amazon cut down on logistics and shipping costs for its own products it buys from China to sell in the U.S., but the main reason appears to be that, in becoming an ocean freight forwarder, Amazon can tie the service into its vast logistics framework and enable its individual Amazon China sellers to more easily move a large amount of goods into the U.S.

Currently, many Amazon Sellers choose to use Amazon’s fulfillment services. They ship their goods to Amazon in bulk and have Amazon store those goods in their regional warehouses. Goods not owned by Amazon but stored it its warehouses will have a "Fulfilled by Amazon" notation on the product listing.

But Amazon's Chinese sellers won’t be able to take advantage of freight forwarding right away. As Flexport points out, commencing its ocean freight forwarder operations could still take months or even years to roll out.

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