Amazon poised to enter the maritime freight forwarding market?

Amazon, Fuel and the Arctic: Three Changes Within the Maritime Supply Chain Industry

Freight forwarding and the maritime shipping industry are in a state of flux, with new players, new routes, low fuel prices and changing consumer trends. What does this flux signify for the supply chain industry?

What Amazon is Facing

With the Wall Street Journal reporting that Amazon is poised to enter the maritime freight forwarding market, analysts wonder how this move will reverberate throughout the industry and whether or not this is a wise undertaking for the e-commerce giant. Amazon hasn’t commented on whether or not they plan to enter the freight forwarding market but experts agree that doing so will take several years.

Right now, reports show a decrease in exports and a slight rise in imports. This works in Amazon’s favor, that is if their strategy is to increase imports from China, which many people think is the case.

Megan Geuss writes in Ars Technica, that ocean shipping is only part of Amazon’s overall logistics’ plan and it provides Amazon with a competitive edge over other American and foreign companies.

Good News For Everyone

With slow economic growth and weak demand for goods, consumers are not making life easy for shippers. With all of that said, lowered fuel costs are working in Amazon’s (and all shipper’s) favor. Analyst Donald Broughton told The Wall Street Journal:

The ongoing decline in the cost of fuel has effectively lowered the cost of operations for all modes of transport, which allows marginal operators to continue where they would have otherwise failed, and allowing better operators to thrive.

New Routes

Due to thinning ice sheets, navigation through Arctic waters is expected to increase. Experts anticipate faster, up to 40-percent faster, transport through these areas. The slow-down, however, is a limited U.S. ice breaker fleet able keep routes clear. Although new ice breakers have been commissioned, Russia is still ahead of the game when it comes to clearing icy routes.

All these developments indicate that maritime shipping gains importance as global trading intensifies and more players enter the industry. With flux, comes openings for agile players but even the most agile and opportunistic entrepreneur needs to remember that the bottom line is consumer behavior. Let those trends guide your strategy.