Experts say that Amazon's expansion will make it a competition to other firms like DHL Worldwide Express and United Parcel Service Inc. (Photo : Getty Images)
Seattle-based Amazon.com is expanding its logistics operations in China. According to Reuters, the move will help the company control the increasing costs associated with shipping.
Part of its aggressive expansion in the country involves the handling of cargo and customs for goods that are to be delivered to Japanese, European and American ports.
Experts say that the expansion puts Amazon.com in a position that makes it a possible competition to other firms like DHL Worldwide Express and United Parcel Service Inc.
If ever that's the case, the expansion will mirror that of Amazon's cloud computing arm. Amazon Web Services is currently the company's fastest growing unit. It was originally meant to aid Amazon.com's retail operations, but it's providing services to other companies.
The expansion in China is to help Amazon deal with the increasing pressure it's facing from Wall Street due to rising shipping costs. According to Reuters, shipping costs have risen by 37 percent in the most recent quarter.
Amazon has already registered Beijing Century Joyo Courier Service, its Chinese subsidiary, as a freight forwarder with the country's ministry last year. This allows the company to export cargo out of China.
The same Chinese subsidiary also applied for a similar position with the U.S. Federal Maritime Commission in November last year. Other applications involve the Shanghai Shipping Exchange. If ever approved, this will allow Amazon to serve as one of the shipping brokers for 12 trade routes, including Shanghai to Hamburg and Shanghai to Los Angeles.
"These are major gateway ports," said John Manners-Bell, head of Transport Intelligence, in an interview with Reuters. "They appear to be laying the foundation for a large forwarding operation."
In the plans submitted to the exchange, Beijing Century Joyo plans to charge clients $530 to $3,530 to transport a 40-foot container from Shanghai to Hamburg--a rate that's already comparable to other forwarders.
Thanks to Amazon's new freight forwarder license, analysts believe that the firm can make shipping easier for Chinese merchants and manufacturers, especially if they're transporting goods to locations where Amazon has warehouses.
