Amazon Looking to License or Acquire Freight-Management Technology, Sources Say -- Update
May 18 2016 - 12:10PM
Dow Jones News
By Erica E. Phillips
Amazon.com Inc. is on the hunt for technology to help it run its
rapidly expanding freight-transportation network, according to
people at companies that have been contacted by the retailer.
The online retail firm recently signed deals to lease cargo
planes and registered to arrange ocean-cargo shipments, marking the
company's entry into the $150 billion-a-year global business of
freight forwarding. Analysts believe the moves are part of a larger
effort to reduce shipping costs for sellers on the company's
website, cutting out the middlemen for shipments of goods from
Asian factories to Amazon warehouses in the U.S.
Now, Amazon is looking to license or acquire technology that
could find the most efficient shipping routes and hire fleets of
trucks, ships and planes to move sellers' goods. In the last two
weeks, Amazon has reached out to several
freight-services-technology companies requesting information about
their offerings, people at the companies said. A person at one of
those companies said an Amazon representative told him the retailer
is seeking out existing technology to save time on development.
A representative for Amazon didn't respond to a request for
comment.
Most large retailers and manufacturers use
transportation-management software to manage the flow of goods
through their supply chains. But many smaller companies still book
space on a ship or cargo plane via phone call, or even fax, and
often their goods are tracked using emailed spreadsheets. Freight
startups, including Flexport Inc. and Haven Engineering Inc., say
they want to make arranging freight transportation as easy as
booking a vacation online, and provide tracking for shipments as
they make their way around the world.
It is a field that has attracted funding from Silicon Valley
investors, though the new crop of companies have yet to pose a
serious threat to the world's leading forwarders, many of which are
working on similar technology of their own.
For Amazon, acquiring a freight-forwarding platform would allow
the company to drive more volume toward its own cargo-handling arm,
driving down costs for sellers, who in turn can keep prices low for
customers, said Satish Jindel, president of SJ Consulting Group
Inc., a logistics-research firm.
Amazon appears to be "saying to its sellers, 'We're going to
give you the Amazon experience,' " he said. "You're outsourcing
production anyway, why not outsource your entire supply chain?"
With the right technology, Amazon's plans could pose a threat to
established forwarders as well, by winning over their small- and
medium-size clients -- many of whose goods are destined for Amazon
distribution centers anyway.
Amazon's entry into the freight forwarding business would also
present a direct challenge to the startups. Ryan Petersen, chief
executive of Flexport, said when Amazon asked for a presentation on
his company's technology, "I declined politely."
Write to Erica E. Phillips at erica.phillips@wsj.com
(END) Dow Jones Newswires
May 18, 2016 11:55 ET (15:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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