Amazon’s critics turn the tables on disruption

Malcolm Latarche

Malcolm Latarche · 02 December 2019

ShipInsight


It was not so long back that you couldn’t attend a shipping conference, pick up a trade journal or magazine or talk to colleagues, customers and suppliers without coming across the term ‘disruption’ a dozen times in a few minutes. It seemed as though just about anything and everyone was preparing to disrupt the industry and nothing would ever be the same again.

Today you hardly ever come across the term. It has been replaced by two other D words, Digitalisation and Decarbonisation. To be fair both of those terms, could as they are implemented, be considered as disruption but perhaps not in the way that the proponents of disruption thought likely.

Back in March 2017 when talk of disruption was at fever pitch I wrote – deliberately avoiding the word disruption myself -

Several interesting views were expressed at the Transas Global Conference being held in Malta yesterday. Discussing the future of shipping and comparing the industry to aviation, several speakers expressed viewpoints and while most agreed that shipping was going through a period of change, there was almost no consensus as to what the extent of change may be or the time span over which it may occur.

A core subject of the first day was what impact would the likes of Amazon and Alibaba have if they decided to become owners or operators of ships. While some felt this was a very likely possibility there are others less sure. As a retailer Amazon may be a major player but sales values do not necessarily mean trade volumes. Amazon’s highly publicised desire to control its shipping activities apparently amounted to only around 150 containers being booked from China to the US in the three months from October 2016.

Jeff
Would Jeff Bezos want to own ships??

That sort of volume may make it profitable for them to book containers directly with shipping lines rather than through freight forwarders (although employing even one or two staff to do the work may not result in much of a saving overall) but it hardly warrants the purchase and cost of operating even a Panamax size box ship. As one speaker said, Ikea has shown no interest in controlling its own shipments and it probably ships more volume than Amazon’.

In the west, Amazon tends to make the news pages and TV more than Alibaba does and through this year it has done so with reports of leasing more aircraft for logistics in the US, increasing deliveries covered by its next day service Prime and more. It has yet to buy or charter its own ship and it will need to control a lot more shipments before that would be profitable. It may have access to 20 of its own planes in the US but they can only carry under 24 tonnes each which equates to around two loaded shipping containers.

Not all of the headlines around Amazon are positive for the company. There are reports about low-paid demoralised employees even though they apparently can find plenty of people willing to fill the posts. Last week however, things took a new twist with Amazon on the end of climate protests in France and elsewhere in Europe. Shipping has had to bear the brunt of many environmental protests – some justified but mostly not – and might sympathise a little bit with Amazon which is now blamed for fuelling consumerism and in doing so putting the health of the planet in jeopardy.

Amazon

The protests which took place on what is known as Black Friday – a big event in the shopping calendar in the US when stores offer goods at discount prices – were dubbed as ‘Block Friday’ in France.

According to the UK News service BBC, Environmentalists have accused Amazon of accelerating climate change through its rapid delivery services, which they say contribute to greenhouse gases emissions. Manon Aubry, a left-wing member of the European parliament, said the protest was intended to "denounce the social, environmental and fiscal damage from Amazon".

Coline Vanhenacker, a spokeswoman for environmental group Friends of the Earth, said Amazon represented "overproduction, overconsumption and overwaste". "Today 25% of French greenhouse gas emissions are linked to textiles and electronics products and Amazon is the leading distributor so we have to put a stop to it," she said. One of the groups involved in organising the protests, anti-globalisation movement Attac, said it would "take action across France to disrupt Amazon's business".

As of Friday morning, dozens of activists from various groups had gathered outside Amazon France's facilities, including its headquarters in Clichy. They held up a sign saying: "No to Amazon and its world." In a statement, Amazon said it respected "everyone's right to voice their opinions" but disagrees with the means used by some protesters. It accused Attac of spreading "false allegations" and "pointing the finger at Amazon for political ends". "Amazon directly employs 9,300 people in France, provides business opportunities for thousands of companies and SMEs in France, and has made ambitious commitments in our 'Climate Pledge' plan to become a net zero carbon company ten years ahead of the Paris Climate Agreement," the company told the BBC.

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Which brings us neatly to the subject of decarbonisation. At the time of the Transas conference in 2017, few expected that 18 months later the IMO would announce an ambitious plan to reduce shipping’s carbon emissions by half and eventually to eliminate them altogether before the end of the century.

It is an ambitious plan and one which although it seems impossible now, may happen if there is a technological breakthrough that is not yet forecast by any of the traditional marine technology organisations. Probably the nearest we will get to zero carbon will be by a combination of hydrogen and bio-fuel powered ships.

Ikea

Shipowners and their customers are not normally considered as having very much to contribute to technology breakthroughs even if some of the industry customers like to boast their own green image by insisting shipping ‘does something’ to green up. Exactly what they can do and at what cost is debateable, but some owners do try.

Few of the customers though are willing to invest in such initiatives themselves but this year one has. Working together with CMA CGM and biofuels specialist Goodfuels, Ikea – the company mentioned at the Transas conference as likely having a bigger shipping volume than Amazon – has been engaged in a project trialling a new biofuel. There hasn’t been much publicity about how much Ikea has invested in the project but we must assume that it was significant since CMA CGM were prepared to single them out from all of the shippers with cargo on their vessels.

This year has seen a step change in climate protests with a ramping up of rhetoric and action from the environmentalist side. Their actions may not find favour with the vast majority of the public – in fact there is plenty of evidence to suggest it has having the opposite effect – but they are there to be tackled in any case.

If they succeed in turning the tide of what they see as unsustainable consumerism, it will not only disrupt Amazon but will also result in much smaller volumes of traffic for container lines. Somehow I am not sure that was what those who talked of Amazon’s disruptive influence meant.

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