Creating Great Expectations: Maersk & Alibaba *Updated* for Amazon’s Response

Last year, news leaked that Amazon was building their own freight brokerage (technically, establishing themselves as an NVOCC) which would compete with companies like FedEx & DHL and increase stickiness with their marketplace sellers. Now 2017 got off to a bang with news that Maersk Line will be listing rates on Alibaba’s website.

First off, tip of the hat to Maersk line for generating excitement over an innovation in shipping. They’re easily the most tech-forward company in the liner industry; no one else is even close.

That said, there’s a lot we don’t know about this deal — and if both companies want to genuinely transform shipping for SMB sellers, the devil will be in the details. Alibaba has a lot of customers who don’t understand logistics, so Maersk can quote them the rack rate and get an upfront deposit (rare in the industry). The customer will need to arrange trucking on both sides of the shipment, via a freight forwarder. Conveniently, Alibaba has a freight forwarder — Cainiao. It’s unclear how the customer would handle wanting to use their own freight forwarder…finding a freight forwarder can be a time-consuming process for many small sellers.

Imagine paying a premium to lock in a full-price rate on new tires, and then showing up to your mechanic, hoping the tires show up on the date they were promised, and requesting that he put them on the car. Bad prices & terrible service.

Most carriers are thrilled to sell slots for a premium with payment upfront…but the contract won’t always guarantee the sailing or equipment availability. Can that SMB seller wait another month or two for their shipment to move? If sailings are delayed and shipments are reshuffled, will the random customer buying product via Alibaba going to bump Walmart if the ship’s full? Doubtful.

There’s another player in the market who is likely to be unhappy about this arrangement: the freight forwarders: “Maersk said that the launch of the service was not about bypassing the industry’s traditional middleman freight forwarders, as the OneTouch platform still used such firms to provide services such as haulage.” — Reuters

Translation: ‘Don’t worry, freight forwarders (who sell more than 50% of our volumes) going past you to the customers for their ocean freight business doesn’t destroy your margins. We promise.’

Even with these potential pitfalls, I’m hopeful that the Maersk-Alibaba partnership will become something more than yet another web company listing their rate card publicly. While the first few shipments will likely be difficult, I hope that customers stick with the concept so that Maersk and Alibaba can improve their offering and customers can streamline their supply chain.

Source: http://www.reuters.com/article/us-alibaba-maersk-idUSKBN14O0S7

***Update***

According to an article released today, Amazon will start offering its freight rates online for their suppliers. Though this has always been done privately for FOB shipments, it’s a great addition to their growing end-to-end solution for small businesses needing to sell goods on Amazon. http://www.wsj.com/articles/amazon-expands-into-ocean-freight-1485357884.