Amazon set to disrupt shipping industry with new brokerage platform
Not long after Amazon’s announcement about its plans to make 1-day shipping the default for Prime members, the company launched a trial version of its new digital freight brokerage platform. Just like platforms offered by Uber Freight and C.H. Robinson, Amazon’s platform aims to cut out the middle man by connecting shippers to trucks directly. The company is initially offering a beta service for truckload shipments in Connecticut, Maryland, New Jersey, New York and Pennsylvania. It is also possible to get instant rate quotes through its online portal, freight.amazon.com.
This could raise concerns for freight operators as they may have to directly compete with Amazon for business. Share prices for most truckload and brokerage companies declined on Monday and Tuesday, including shares in C.H. Robinson which declined by over 10%. Armstrong &Associates president Evan Armstrong stated that the new platform would give Amazon more leverage with carriers on negotiating rates: “You get synergies by allowing shippers to come on to your platform, and you increase your network scale and your purchasing power with trucking companies.” Freightwaves made claims that Amazon Freight is undercutting prices from 26 to 33% as a “free, marginless brokerage” service. The company has however rejected all claims.
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First digital customs clearance in container shipping industry
Amazon isn’t the only one to have launched a digital platform this week. A.P Moller Maersk announced the launch of its digital customs clearance platform, which it claims is the first in the container shipping industry. Users will save “3 to 5 minutes per quote” as pricing for import and export customs declarations is displayed online, eliminating the need for Maersk to provide shippers with a quote.
The platform has initially been launched in Germany, France, Spain, Denmark, The Netherlands, Poland and the UK, although Maersk hopes to expand its offering by the end of this year. Over the past several years, the container line has been moving towards more customer-centric supply chain and logistics operations. Its acquisition of Vandegrift and merger with Damco are clear indicators of an increased focus on digitalized logistics services. Logistics solutions company Damco will be taking care of the customs clearance process.
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China’s swine epidemic spells bad news for supply chains
Since last year, China has suffered numerous outbreaks of African swine fever. The swine fever is a highly contagious disease and has not yet been successfully cured. China’s pork industry has already seen significant losses; according to the Ministry of Agricultural and Rural Affairs, around 900,000 pigs have been culled since the first record of the virus.
Dutch bank Rabobank estimates that China’s pork meat production will drop by 30 to 40 percent this year compared to 2018. China’s pork meat production is expected to decline by between 9 million and 15 million tons. Given that last year the number of farmed pigs in China amounted to 60% of the world’s total, it will be quite difficult to fill the supply gap in China if this epidemic continues. The epidemic isn’t just bad news for China’s pork supply chain; China’s pig industry produces products which are used in many different goods, such as dry bulk commodities and medicines e.g. heparin.
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Have a nice weekend.