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Supply Chain News: Amazon Testing more Aggressive Shipment Service in Three US Markets

 

Program Now Called Amazon Shipping for Marketplace Sellers Live in New York, Chicago and LA

April 9, 2019
SCDigest Editorial Staff

Amazon is getting more aggressive with a program now called Amazon Shipping, which appears to be the current version of a program launched in 2018.

As reported on the Lloyds Loading List web site, and based on a new posting by Amazon-focused research firm TJI Research, Amazon is said to be soliciting parcel shipping business from customers using its marketplace services in New York, City, Chicago and Los Angeles.

Supply Chain Digest Says...

According to a recent report which cited data from consultancy Shipmatrix, Amazon currently handles 10% of its own shipping traffic..


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Amazon Shipping is said to involve Amazon picking up packages directly from select marketplace customers it is “inviting” to be part of the program. This would include daily parcel picks Monday to Friday and delivering them seven days a week to customers nationwide.

Marketplace customers sell over the Amazon web site but traditionally do their own order fulfillment.

This appears to be an extension of a program first called Shipping with Amazon (SWA). In early 2018, it was reported that with SWA, first tested just in the LA area around that time, Amazon would take direct control of shipping for its marketplace sellers in the area, picking up packages at those company's facilities, getting them into its network, and in some cases take those parcels all the way to consumers' homes.

SWA, in turn, is similar to, but different from, another service Amazon announced in 2017 called FBA Onsite. With that, Amazon will again take shipments from its third-party Marketplace sellers into its network, but only to leverage its volumes and scale using traditional carriers such as FedEx, UPS and the USPS for last mile delivery. The theory was that scale gives Amazon more options for the shipper in terms of cost and delivery times, and enable more Marketplace orders to participate in the Amazon Prime program that offers free two-day shipping for a set fee per year.

The SWA program took that program ever further, with Amazon not just taking the shipment into its network, but taking care of final deliveries where it could. Amazon is already performs some last mile delivery in dozens of markets, a number that continues to grow as Amazon expands yet another program, Amazon Delivery Partners. Under that initiative, local entrepreneurs lease branded vans, pick up ordered items in their markets from an Amazon FC or other facility, then make the local deliveries.

In other markets, it appears Amazon will often get packages close, say via truckload carriers or air, and then use the traditional carriers for the last mile.

According to Lloyd's list, this full seller-to-customer shipping service is just the latest sign that Amazon not only its developing its long denied plans to become a major parcel carrier of its own, but also has ambitions of being a major logistics service provider such as XPO Logistics.

In fact, just recently XPO said revenue from its largest customer, universally believed to be Amazon, would fall from some $900 million to $300 million in 2019, as the customer moved in-house many of the services XPO was handling related to sortation for US Postal delivery.


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TJI notes that "While we understand Amazon Shipping currently only operates via ground, we generally expect Amazon to employ more of its logistics assets and expertise to incorporate air and other modes of transportation in the future."

Just recently, Amazon announced it was increasing its equity stakes in Atlas Air Worldwide and Air Transport Services Group, from which it leases freight aircraft. Amazon will now own about 40% of both companies.

What's more, in December, Amazon expanded its air fleet by 50 planes. It's also opening several regional air hubs, including a $1.5 billion hub at Cincinnati/Northern Kentucky International Airport, slated to open in 2021.

According to a recent report which cited data from consultancy Shipmatrix, Amazon currently handles 10% of its own shipping traffic. Meanwhile, USPS handles 62% of Amazon's traffic, UPS handles 21 to 26% and FedEx handles 8 to 10%.

Any reaction to Amazon's expanding shipping services? Let us know your thoughts at the Feedback section below.


 
 

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