Thursday, December 17, 2015


Amazon to start overnight airfreight operation. What does it mean to UPS and FedEx? Will they offer service to others? Will Amazon move into 3PL business? They would have competitive differentiation & advantage because they KNOW shipper side.

EXCLUSIVE] Amazon building its own overnight airfreight operation, sources say

Source: Public.Resource.Org Inc. is creating a logistics operation that will include overnight air operations in the US domestic market, potentially including the acquisition of at least 20 freighter aircraft, Cargo Facts has learned.
Currently, Amazon ships most of its parcels through United Parcel Service, FedEx, and the United States Postal Service. The change to an inhouse logistics venture would seismically change the airfreight industry, as the majority of new air cargo activity around the world has come from e-commerce companies — and much of it from Amazon, in particular.
Last quarter, Amazon had net sales of about $25.4 billion, and a total of $100.6 billion in the previous 12 months. Amazon’s sales are growing at an annual rate of 18%, according to the company. Amazon’s market capitalization stands at about $316 billion.
Amazon’s efforts are ongoing and fluid, but sources tell Cargo Facts that the world’s largest e-commerce company by revenue is negotiating for the acquisition of perhaps 20 767 widebody freighters from The Boeing Company. By considering the ownership of a fleet of aircraft Amazon is signaling that it will take in house at least some of the massive logistics and shipping services currently provided to it by UPS, FedEx and USPS.
Amazon did not respond to a request for comment. FedEx did not respond to the substance of our request for comment. According to a UPS spokeswoman, “We don’t comment on speculation about Amazon, who continues to be a valued customer.” Cargo Facts has requested comment from USPS.
David Vernon, an analyst at Bernstein Research who tracks the shipping industry, has estimated that USPS handled 40% of Amazon’s volume last year — or almost 150 million items. UPS, meanwhile, is estimated to handle 20% to 25% of Amazon shipments, while FedEx is said to ship 15% to 20% of Amazon’s annual load, according to the equity research firm.
Cargo Facts subscribers can read additional details on Amazon’s plans here.