Is Amazon Aiming for Air Cargo Business? - Global Trade Magazine
  December 30th, 2015 | Written by

Is Amazon Aiming for Air Cargo Business?

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  • Amazon is reported in talks to lease Boeing jets to launch its own air-cargo business.
  • Reports say Amazon wants to expand its delivery operations to avoid carrier bottlenecks.
  • Traditional parcel carriers have struggled to keep up with the rapid growth of e-commerce.

Press reports in recent days have indicated that is in talks to lease 20 Boeing 767 jets. The purpose: to launch its own air cargo wing so it can be less dependent on UPS, Fedex, and the postal service.

Some reports have even speculated that Amazon will venture beyond making its own deliveries to providing those same services to other shippers.

Some media outlets have also reported that Amazon conducted tests late last year of a potential air delivery system, centered in Wilmington, North Carolina. Wilmington is the site of a former air hub that was formerly used by several parcel carriers.

For the record, these other reports have quoted aircraft leasing executives and industry analysts. No one from Amazon was quoted by name or otherwise. An Amazon spokesperson told Global Trade Daily that the company would refuse to comment on “rumors and speculation.”

If true, Amazon would working to avoid the snafu that occurred two years ago, when holiday volume overwhelmed UPS and many Amazon customers received gifts after Christmas. Some reports show that package-delivery services fell behind this holiday season as well, but these have been denied by the carriers.

Amazon has been working to exercise greater control over its shipping over the past couple of years. In 2014, it inaugurated its first sorting center in Kent, Washington, from which it sends packages to U.S. post offices for same-day delivery.

Prime Now, a subscription same-day delivery service from Amazon, is another example of how the company is trying to circumvent the carriers. Prime Now deliveries are performed by contract couriers who carry packages from urban warehouses to customers’ homes.

Amazon has also announced it is acquiring thousands of trailers to be to handle its growing volume of packages and transported by third-party carriers.

“We have a very good and longstanding commercial relationship with many carriers, but we know that there is supplemental capacity needed in the market — so we are supplementing our existing carriers with our own trailer equipment,” Mike Roth, Amazon’s vice president of North America operations, told the Chicago Tribune in early December.

If Amazon eventually carries air-cargo packages for other companies it will be putting itself in direct competition with UPS, FedEx and other carriers. Presumably, Amazons aircraft will have some extra space and it would not make sense for Amazon not to maximize its loads.

This would not be the first time Amazon ventured afield from its core online retail business. Amazon Web Services provides companies with cloud computing services.

If the reports of Amazon’s air-cargo ambitions are true, the company could shake up the package delivery business.

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