Does Amazon need its own air cargo operation?
Amazon is reportedly in negotiations to lease nearly two dozen cargo planes to establish its own air freight operations.
Sources told The Wall Street Journal and The Seatle Times that Amazon is looking to lease jets from Atlas Air Worldwide Holdings Inc. and Air Transport Services Group Inc.
The leasing of the estimated 20 to 25 jets would mark a significant expansion on a smaller trial Amazon has been reportedly conducting out of Wilmington, OH with Air Transport Services Group since September. The jets Amazon is negotiating to lease would likely operate out of Wilmington Air Park, which previously served as a major facility for DHL until 2008.
The reason Amazon wants to build its own cargo operation is to lower its reliance on third-party carriers, which have been challenged meeting the growing demands of e-commerce. Delays in 2014 caused holiday shipments to arrive late.
While more efficiently moving packages, Amazon would still more than likely use UPS, FedEx and the USPS for deliveries to doors, at least initially. But an analyst told The Seattle Times that Amazon could open up extra space on its jets to other companies to become competition to third-party carriers.
With Amazon Prime’s allure tied to free shipping, another incentive for Amazon is to gain further control over shipping costs. The company has introduced its own fleet of trucks and couriers, is testing drones, and recently rolled out thousands of truck trailers to ship merchandise between distribution facilities to better control the last mile of delivery.
A final decision on the cargo operation is expected by the end of January, The Seattle Times reported. Noting that it takes months to convert older passenger planes to freighters, the Journal said Amazon hopes to phase the planes into operation over the next three years.
- Amazon Seeks Cargo Planes for Air Freight Operation – Wall Street Journal
- Amazon in talks to lease Boeing jets to launch its own air-cargo business – The Seattle Times
- Amazon building its own overnight airfreight operation, sources say – Cargo Facts
- A Secretive Air Cargo Operation Is Running in Ohio, and Signs Point to Amazon – Motherboard
What are the pros and cons of Amazon developing its own air cargo operation? Should Amazon be looking to supplement or replace third-party carriers?