Amazon expands logistics reach in China

Wed Feb 10, 2016 1:14pm EST
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By Mari Saito and Brenda Goh

SAN FRANCISCO/SHANGHAI (Reuters) - Inc (AMZN.O: Quote) is aggressively expanding its logistics operations in China as part of a broader effort to control the rising cost of shipping billions of packages.

Its plans in China, outlined in filings there, include handling cargo and customs for goods headed to ports in Japan, Europe and the United States.

Some analysts say the move could help position Amazon to offer shipping services to other companies, eventually competing with the likes of United Parcel Service Inc (UPS.N: Quote) and DHL Worldwide Express BV[DHL.UL].

That would mirror the strategy of Amazon's cloud computing arm, Amazon Web Services, which is now the company's fastest growing unit. The service was launched to serve Amazon's own retail operations but now hosts data for other companies.

Seattle-based Amazon faces increasing pressure from Wall Street to drive down shipping costs, which rose 37 percent in the most recent quarter compared to the same period a year ago.

A spokeswoman for Amazon declined comment.

The company revealed its China plans in documents filed with regulators there.

Amazon registered its Chinese subsidiary, Beijing Century Joyo Courier Service, as a freight forwarder - a type of broker that does not own ships but handles customs and other documentation - with China's transport ministry last year, allowing it to export cargo out of the country.   Continued...

A worker gathers items for delivery from the warehouse floor at Amazon's distribution center in Phoenix, Arizona November 22, 2013.  REUTERS/Ralph D. Freso