Amazon Plans Air Cargo Services for China Retailers

According to a Wall Street Journal report, the Seattle-based company plans to launch a site that will enable sellers from China to use its services to transport their goods to international markets.

That bit of news follows a September report by the same publication that Amazon was acting as a freight broker for Chinese merchants.

The WSJ reports that Amazon has said it is currently “developing” the air cargo service and will introduce it soon.

However, it is not clear whether the company will operate its own cargo airplanes or lease them from existing carriers.

Read: Amazon Takes to the High Seas

In the past two years, Amazon has significantly ramped up its logistics ambitions. It has leased airplanes and invested in fleets of trucks to improve delivery times across its network.

While the numbers in Amazon's initiatives may seem small, the company's bigger end goal is to provide competition to existing logistics behemoths, such as FedEx Corporation and United Parcel Service, Inc.

Read: Will Amazon's Logistics Moves Ground UPS and FedEx?

There are a couple of benefits that will accrue to Amazon from developing its own logistics systems from China.

First, it will help the company improve product margins for goods imported from that country. This is because Amazon will be in control of the shipping process (as opposed to the vendor) and will be able to negotiate better rates with shipping lines and authorities.

A Reuters report states that Amazon's Chinese subsidiary offers rates between between $530 and $2,530 to move a 40-foot dry van container from Shanghai to Hamburg. “The wide range gives it flexibility to charge based on volume,” the report states.

Second, Amazon's move will bring more sellers from China to its site and boost its presence in the country. Amazon's earlier attempts at penetrating China's e-commerce market failed, and it was upstaged by rival Alibaba Group Holding Limited.

However, offering to move large shipments from vendors will provide Amazon with a backdoor entry into the market.

Read: Unwrapping Amazon's Logistics Moves

Related: Amazon Has Still to Conquer the Chinese Market

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