Yeah, it is going to a big "oh shit" moment for all the existing players in the logistics and freight forwarding industry. It may take Amazon a few years to build up the infrastructure but once they do, they could eat everyone's lunch.
I'm sure I'm missing the greater significance.
Most likely this is just more of them trying to own more of the vertical which probably translates into cost savings.
If Amazon is serious about being an ocean carrier, they would be the first major new competitor to enter this space since before the invention of the internet. All the competition is still mired in 80s technology.
But the technology issue aside, my point was really that Amazon has a more aggressive growth strategy and "become a monopoly" mentality than any incumbent player in this field and would be willing to take a loss in order to take market share. I believe they also have a small army of operations science PhDs who understand logistics network optimization better than anyone else in the field, and they also invest heavily in automation and robotics. They have self-driving forklifts as well as automated systems that feed instructions into the earpieces of their warehouse workers now. If they apply this strategy toward freight forwarding, that industry is going to be shaken up in a big way.
Whats wrong with it, in this case? Even if maintenance costs go up, its still cheaper to maintain than to build a new system, especially if the old system fulfills all the requirements and is proven.
When these companies want to get their business off of a legacy system, they essentially have three practical choices: 1. SAP 2. Oracle 3. A bespoke system coded in Java or .NET.
Modern customers want real-time data and analysis. They want all of their information available on the web, mobile, sms, email, API. They want a modern technology experience.
A DOS program consuming data via EDI and Excel-based input is a good candidate for the worst technology to do these types of things.
I think most customer just want to know when their stuff is going to arrive - they don't need 'real-time data and analysis' (or if they do, they don't expect the guy moving the cargo to provide it for them).
Also, those DOS\cobol systems already made shipping so cheap you can get a 40 foot container (full of stuff) from China to LA for $1300.
They can't scale? They currently handle the whole world's shipping needs. That sounds like it scaled just fine.
You wouldn't, but freight forwarders typically don't move bulk cargo, they move containerized cargo. Bulk means the entire vessel hull is loaded with one raw materials commodity, like grains or minerals.
Companies importing finished goods absolutely do want instant, automated status updates on where their goods are at, because that information helps them load-balance their supply chain to keep their warehouses and stores stocked at the right levels and evaluate the performance of their contracted manufacturers and logistics service providers. Supply chain managers absolutely want scorecards and dashboards and push status updates.
[1] E.g https://kontainers.com I'm not affiliated, but they did do the same accelerator as my startup.
Lots of big companies run such things in-house less efficiently just to keep their outsourcers on their toes.
Last month it was Air Cargo
http://www.seattletimes.com/business/amazon/amazon-in-talks-...
They very well could be disruptive, but I also see this as a rising-tides scenario. There are plenty of companies that wish to facilitate international commerce without using Amazon. Amazon could raise the bar, making opportunities for smart startups to build solutions that will mimic Amazon capabilities for non-amazon customers.
I'm working on the compliance aspect of international commerce, specifically classification of commodities, and estimating duty and other international taxes. My dream is to allow any merchant the ability to easily have international customers without having to worry about cross border regulations.
Amazon getting in this space feels like momentum for updating a proven, but old model of doing commerce.