Leaked Amazon document suggests plans for global logistics network

Feb 9 2016, 16:24 ET | By: Eric Jhonsa, SA News Editor 

A 2013 report to Amazon's (AMZN -1.2%) leadership "envisioned a global delivery network that controls the flow of goods from factories in China and India to customer doorsteps in Atlanta, New York and London," Bloomberg reports.

A source tells Bloomberg the project, codenamed Dragon Boat, is "proceeding." The initiative will provide competition for Alibaba and various cargo middlemen, as well as logistics partners UPS and FedEx.

Bloomberg: "Amazon wants to bypass [the middlemen], amassing inventory from thousands of merchants around the world and then buying space on trucks, planes and ships at reduced rates. Merchants will be able to book cargo space online or via mobile devices."

The 2013 doc: "Sellers will no longer book with DHL, UPS or Fedex but will book directly with Amazon. The ease and transparency of this disintermediation will be revolutionary and sellers will flock to [Fulfillment by Amazon - FBA] given the competitive pricing." Amazon would automate shipping paperwork and obtain cheaper wholesale cargo rates on account of its scale. Bloomberg adds the company could also provide financial services such as loans and payment-processing for merchants.

The report follows ones stating Amazon has received a license (via its Chinese unit) to provide ocean freight services, and is in talks to lease or buy 20 Boeing 767 jets. CFO Brian Olsavsky downplayed Amazon's logistics efforts during the Q4 earnings call, stating the company is looking to supplement rather than replace logistics partners. The ocean freight report observed some merchants could be nervous about handing over their supply chain data to Amazon.

As it is, FBA has seen massive growth - the service shipped over 1B units in 2015 on behalf of sellers, and the number of active sellers using FBA rose over 50%. Amazon has also begun hiring part-time delivery drivers for its Prime Now rapid delivery service, and is pushing ahead with its Prime Air drone delivery initiative.