February 1, 2016

What's in a name: Amazon calls itself "transportation service provider" in filing

Reference believed to be first time company has described itself as transport provider.

By DC Velocity Staff

E-tailing giant Amazon.com in a government filing Friday referred to itself as a "transportation service provider," the first time it is believed that the company, which has long been rumored to be forming its own transportation and logistics operation, has described itself in such a way in a public document.

The reference was embedded in Amazon's annual 10-K filing with the Securities and Exchange Commission. In the "cost of sales" section, Seattle-based Amazon included the provision of "inbound and outbound shipping costs, including where we are the transportation service provider."

Normally, a reference like that might be passed over in a tome as detailed as Amazon's 137-page filing. However, it is significant in that Amazon has reportedly been taking multiple steps to position itself as a transportation provider, both for its own goods sold on its web site, and as part of a broader logistics offering for third-party merchants that use the company's site to showcase their products and rely on Amazon to warehouse and fulfill orders, but not transport them. Amazon has historically relied on delivery partners like Memphis-based FedEx Corp., Atlanta-based UPS Inc., and the U.S. Postal Service to deliver goods, although it has scaled back its activity with FedEx.

Amazon reported in the SEC filing that outbound shipping costs last year exceeded $11.5 billion, a $2.8 billion increase over 2014 levels. Shipping revenue hit $6.5 billion, up from $4.4 billion. Amazon's delivery expenses, as well as its revenue, continue to escalate, a reflection of increasing overall demand for its services and also what is thought to be a continuing struggle to control its delivery expenses. The latter imperative may be a reason it is weighing the development of its own network, although there would no assurance it would reduce delivery costs by taking more of the function in house.

Earlier this month, Amazon's Chinese operations were granted authority by the U.S. Federal Maritime Commission (FMC) to operate as an ocean freight forwarder, according to a blog post from Flexport Inc., a San Francisco-based freight forwarder and customs broker.

In recent weeks, reports have circulated that Amazon is building an air delivery network, under the project code name "Aerosmith." It has been reported that Amazon leased 20 cargo aircraft during the peak holiday delivery cycle, and is testing an underutilized air cargo complex in Wilmington, Ohio, that had been the domestic U.S. hub of DHL Express, which abandoned the facility soon after ceasing domestic air and surface operations in January 2009.

Amazon is believed to have taken delivery of thousands of truck trailers to support short-haul ground operations. It was also reported that Amazon has purchased the French parcel provider Colis Privé to expand its business-to-consumer delivery capabilities in Europe.

The notoriously secretive Amazon never comments on such reports. However, the company is believed to use individuals and outlets as "proxies" to disseminate information about its strategy and execution.

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