Amazon Delivery: 20 Jet Lease
Amazon is wanting to build an Amazon fleet to avoid delays from external carriers such as UPS due to a whirlwind growth in ecommerce. As of December 2015, the ecommerce giant has been in negotiations with Boeing to lease 20 of its 767 jets.
It’s no real surprise that a company of that size is getting frustrated with relying on third party carriers for its delivery, which put bottle-necks in its growth. Only a couple of years ago the holiday rush pushed UPS further than they could stretch so Amazon customers received Christmas gifts after the holiday had passed and as such Amazon had to refund shipping charges and give away $20 gift cards as compensation. As such it’s been reported that Amazon have approach cargo-aircraft lessors such as Air Transport Services Group (ATSG) and Atlas Air in order to take their delivery services into their own hands.
Yet, Boeing 767s, while the preferred plan for cargo delivery, are finite in number and in high demand by many freight services. The main decks can accommodate up to 19 pallets of good. But why turn to lessors? Why don’t Amazon fly the aeroplanes themselves? This is because in order to do so they require an Air Operator’s Certificate, which they currently don’t have.
One analyst of the situation has suggested that with 20 jets Amazon could deliver for other companies and put themselves in competition with the likes of UPS and FedEx. After the holiday rush has died down, Amazon could easily still keep their cargo planes loaded by shipping the goods of other companies. Yet, let’s not get too far ahead of ourselves. Amazon potentially only have 20 jets: FedEx and UPS have over 600. It’s going to take a lot of investment for them to compete. For now, the “thousands” of truck leases mean the company have much more traction on their ground deliveries.
Amazon themselves also highlighted that they have no desire to take on the freight giants, suggesting that while they are quietly building an Amazon fleet of planes, trucks and ships, it is merely to help lessen strains during busy holiday period. With record profits in the last quarter of $482million the company are clearly excelling with the boom of ecommerce, but this doesn’t mean they’ll invest too much further in shipping. Shipping costs for the company were already up 25% from 2014 to 2015, spending a total of $13.5billion. Logistics for Amazon merely seem to be a solution to a problem of extreme success, not a new business venture.