The global shipping industry is going through a tough time. Overcapacity and the lowest recorded freight and cargo rates are causing logistics companies to salvage the situation by diversifying their clientele, namely to serve more online players.
Alibaba is taking advantage of this opportunity and creating a solution for these companies through its OneTouch import and export service, offered by a company Alibaba acquired seven years ago. Chinese suppliers no longer need to go through freight forwarders and can directly book spots on a container ship directly via the internet through OneTouch.
The platform is a sign of growing harmony between logistics companies and ecommerce.
OneTouch has already helped over 20,000 merchants – SMEs and Alibaba’s B2B marketplace sellers – explore cross-border opportunities with China and handles the customs clearance and logistics.
Shipping companies happy to jump onboard
OneTouch was put into the spotlight after signing three big names in shipping; Maersk, CMA CGM and Zim.
“This gritty industry has taken the background role in the past but now has the potential to affect the way every product is sourced, bought and delivered,” comments Dr. Zvi Schreiber, CEO and founder of Freightos.
“Building on a massive 80% ecommerce market share in China, Alibaba’s new partnership with Maersk – which controls 25% of all container ships globally – means Chinese manufacturers and retailers have a direct line to US buyers, avoiding middleman markups. Maersk is testing the waters of digital sales with one of the world’s largest ecommerce companies while threatening forwarder business.”
Whatever you do, I do?
Alibaba’s OneTouch is similar to Beijing Century Joyo Courier Service, Amazon.com’s ocean freight service for Chinese “Fulfillment by Amazon” vendors, who market directly to foreign consumers by staging their goods at Amazon warehouses abroad.
“If you are a Chinese supplier, Amazon FBA lets you “slap a brand on your product, work with a logistics company, list your goods on Amazon, and now all of the sudden you cut out three layers of supply chain and you’re able to get directly to customers,” said Scott Galit, CEO of payment processing firm Payoneer, speaking to USA Today.
A big difference between the two is that OneTouch allows exporters to send their containers to the destination of the customer’s choice.
Why is Alibaba doing this?
Data shows that from China-to-US, less-than-container load (LCL) shipments in 2016 totaled to 699,000. LCL refers to when a shipper does not have enough goods to fill into a container, they would arrange for a consolidator to book their cargo.
Xiao Feng, Vice General Manager of OneTouch comments,
“Our goal is to help small and midsized companies export as easily as big companies do.”
“Alibaba unites small businesses online to increase their bargaining power with suppliers. For example, there’s a big difference in the price paid by a company that often ships 100 containers of products compared with a company that usually only ships one container.”
But it’s probably Dr. Zvi Schreiber who puts it best.
“For Alibaba, this is a direct challenge to global retailers like Amazon. Beyond drones and futuristic supermarkets, Amazon opted to get licensed as a forwarder (NVOCC). Alibaba one-upped them by going directly to the world’s largest ocean liner. Point, Alibaba.”
Interested in Alibaba’s plan to dominate logistics? Read about Cainiao Network here.