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Sep 01, 2023

Amazon Global Logistics in ‘Early Days’ of Network Buildout

Two days, same day, five hours. The question of what’s next in delivery speed

Two days, same day, five hours.

The question of what's next in delivery speed for Amazon.com Inc. is only limited by its fulfillment network capacity, and the Amazon Global Logistics division appears to just be warming up.

A report last week from German business newspaper Handelsblatt said the Seattle-based company wants to grow its customer base and is using promotional pricing to woo sellers to its Amazon Global Logistics (AGL) arm.

It's currently touting on its site as much as an 8 percent discount on ocean bookings for a 60-day period.

"You enjoy a streamlined, end-to-end shipping experience, from cargo pickup at the origin to shipment to the fulfillment center. We offer competitive rates, a user-friendly portal to book and track your shipments and customer support," the company said on its AGL site.

Services currently offered through AGL include ocean and air freight shipping from mainland China and Hong Kong to fulfillment centers in the U.S., U.K., Japan, France, Germany, Italy and Spain.

Amazon, through a spokesperson, said AGL isn't new but "it's still early days" for the service offering.

"We enable sellers to reach customers around the world through our global logistics network, including small and medium businesses who otherwise might not be able to," the company said through the spokesperson.

Put another way, an AGL job posting said the aim is to offer a "one-stop shop for international transportation service (ocean and air freight), providing end-to-end supply chain solutions for our customers."

The company declined to comment on its promotional strategy around ocean shipping rates, but the offer comes amid surging transportation costs across channels.

Amazon's been building out its fulfillment network since 2006, when it launched Fulfillment By Amazon (FBA). Ten years later the company's China-based subsidiary Beijing Century Joyo Courier Service received approval by the Federal Maritime Commission to ship ocean freight for other companies.

Amazon, which spent $75.1 billion on fulfillment last year, about doubled its fulfillment capacity over the past two years. Spending is likely to moderate some going forward, chief financial officer Brian Olsavsky told analysts this month during the company's quarterly earnings update. At the same time, a robust fulfillment network is still key to Amazon's overall growth.

"We want to have capacity to have a healthy retail and FBA business because that fuels Prime and one-day delivery and two-day delivery and same-day delivery," Olsavksy said.

Free same-day delivery for Prime members is now offered in more than 90 metropolitan areas in the U.S., 58 in Europe and also Tokyo, according to the company's fourth-quarter update. Same-day delivery also expanded in the quarter and is now in 24 U.S. metropolitan areas.

Moving product through AGL connects sellers and customers in 190 countries, according to Amazon, and that list is only expected to grow.

Amazon indicated on its site it plans to expand AGL to India, Vietnam and Thailand via what it said were "select transportation modes" that would bring product to fulfillment centers in the U.S., U.K., European Union and Japan.

The spokesperson declined to say what the timing is on the expansion.

AGL offers a menu of shipping options, not unlike what consumers see when they make purchases on Amazon.

In the case of ocean freight, there's a Standard Ocean option where businesses can select if they want to ship with a full container load or less-than-container load. The Fast Ocean option promises an even faster transit time than Standard.

For shipment by air, AGL's charter flights currently have about a seven-day transit time.

In August, the company confirmed it had begun operations at its 800,000-square-foot Amazon Air Hub at the Cincinnati/Northern Kentucky International Airport.

Amazon Global Air vice president Sarah Rhoads said the hub is "ideally situated to more closely connect us to customers all across the country."

The company spent $1.5 billion on the facility, which will eventually employ more than 2,000 people to help process the millions of packages it sees weekly.

Hiring is happening across divisions at Amazon, with more than 90 full-time positions open in various regions for the AGL business. These range from account executives responsible for recruiting large- to medium-sized Amazon sellers, to sales managers in China helping companies’ on their international logistics needs.

The company said in one AGL job posting it's looking for individuals "interested in disrupting global shipping, and making it seamless to move freight from source of origin to Amazon fulfillment networks around the world."

"We are very much in the growth phase of our lifecycle and looking for candidates with a start-up mentality," one job posting read for an account associate in Luxembourg.

Another perhaps best summed up the big-picture logistics aspirations for Amazon: "Our mission is ‘Every supplier. Every location. Every customer on Earth.’"

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