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Mar.7, 2016

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AMAZON'S CONTAINER SHIPPING STRATEGY COMES INTO FOCUS AMAZON'S AMBITIONS TO take more con- trol of its container shipping have become more apparent after the e-commerce giant filed an application with the Shanghai Ship- ping Exchange to be a forwarder on 12 major routes and a 2013 internal proposal reveals its vision for a global delivery network. The filing and revealing of the initiative by Bloom- berg is sure to fuel speculation that Amazon plans to further edge FedEx and UPS out of the handling of its goods. It's describing itself as a "transportation service provider" in a 10K filing in late January, its newly received U.S. non-vessel-operating common carrier license, its purchase of trailers for U.S. deliv- ery, and reports that it might handle some of its own air cargo have provided peeks into how the company is moving beyond control of distribution hubs to the links between them and suppliers. Amazon filed an appli- cation with the Shanghai Shipping Exchange to provide brokering services on 12 lanes, including from Shanghai to Long Angeles and Hamburg, according to a Reuters report. The Seattle-based company's subsidiary, Beijing Century JOYO Courier Service, told the SSE in a filing that it would charge $530 to $2,350 for transporting a 40-foot container from Shanghai to Hamburg. As a non-vessel-oper- ating common carrier, Amazon could gain a prof itable niche in transporting goods f rom Chinese suppliers to t he U.S. a nd increase its buying power with container lines. "A larger percentage of (Amazon's) Chinese shippers are sending small amounts of freight," said Steve Ferreira, founder of Ocean Audit, a Connecticut-based glo- bal ocean freight auditing ser vice. "The most striking thing is Amazon's ability to co-op a lot of smaller Chinese vendors and make one huge vendor." According to the internal proposal by Amazon's senior man - agement team, the company would launch "Global Supply Chain by Amazon" as soon as this year, according to Bloomberg. The ini- tiative would allow Amazon to circumvent forwarders by first partnering with them and then pushing them out after it gains enough expertise and buying power through increased volume brokering. "Sellers will no longer book with DHL, UPS or FedEx, but will book directly with Amazon," according to the report. "The ease and transparency of this disintermediation will be revolutionary, and sellers will flock to (Fulfillment by Ama- zon), given the competitive pricing." CP TESTS REGULATORY WATERS IN BID TO ACQUIRE NS CANADIAN PACIFIC RAILWAY is asking the U.S. government to vet the viability of its proposed merger with Norfolk Southern Railway. The Calgary-based railway in February it plans to seek a declaratory order from rail regulators on the U.S. Surface Transportation Board, confirm- ing the feasibility of the voting trust structure that CP has suggested as part of its proposed merger. NS, which has now rebuffed three offers from the Canadian railway since November, has long fought for CP to seek such an order from the STB before pursuing any further takeover bids. The latest offer was for more than $30 billion. The Virginia-based railroad's board of directors has been unenthusiastic about the proposed merger, complaining CP has undervalued their company. UPS, a major user of intermodal rail networks, told the STB in a Feb. 8 letter that it feared a merger would hurt competition and service, and spark further consolidation that would only reduce rail reliability and shipper options. Although carload shippers have taken both sides on the potential merger, UPS's public declaration highlights ship- pers' fear that improving intermodal rail service could falter if the railways are integrated. EU CONTAINER PRICING PROBE COMING TO AN END NEARLY SIX YEARS after European regulators raided the offices of several container lines, the carriers and government appear on the cusp of ending a much-speculated saga. Fifteen of the world's largest container carriers, including Maersk Line, Mediterranean Shipping Co. and CMA CGM, have offered to change their prac- tices for setting freight rates to settle an antitrust investigation, the European Commission said. The EU's executive agency said interested Spotlight 4 THE JOURNAL OF COMMERCE www.joc.com MARCH 7.2016 4 THE JOURNAL OF COMMERCE www.joc.com

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