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Amazon Building Global Delivery Business to Take on UPS, FedEx


Amazon.com

In recent weeks, speculation has mounted that Amazon.com Inc. plans to launch a global shipping and logistics operation that will compete with UPS Inc. and FedEx Corp.

Asked about reports that the company was leasing planes and had registered an ocean freight booking business, Chief Financial Officer Brian Olsavsky downplayed Amazon’s ambitions last month in an earnings call. He said the company was looking to supplement its delivery partners — not replace them — during peak periods such as the Christmas shopping season

Amazon documents reviewed by Bloomberg News reveal a far bolder plan.

A 2013 report to Amazon’s senior management team proposed an aggressive global expansion of the company’s Fulfillment By Amazon service, which provides storage, packing and shipping for independent merchants selling products on the company’s website. The report 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. The project, called Dragon Boat, is proceeding, according to a person familiar with the initiative, who asked not to be identified because the information isn’t public.

The ambitious strategy promises to turn FedEx and UPS into Amazon rivals but also will pit the Seattle giant against Chinese counterpart Alibaba Group Holding Ltd. Both companies are vying for dominance of the rapidly growing cross-border e-commerce market, which by 2020 is expected to swell into a $1 trillion industry serving 900 million shoppers, according to a June report from Accenture and AliResearch, Alibaba’s research arm.

Amazon’s plan would culminate with the launch of  “Global Supply Chain by Amazon" as soon as this year, the documents said. The new business will locate Amazon at the center of a logistics industry that involves not just shippers such as FedEx and UPS but also legions of middlemen who handle cargo and paperwork associated with transnational trade.

Amazon wants to bypass these brokers, amassing inventory from thousands of merchants worldwide 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, creating what Amazon described as a “one click-ship for seamless international trade and shipping.”

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By Spencer Soper
Bloomberg News


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