In 2019 I told you that Amazon would offer consumers a standalone alternative to UPS and FedEx, something that was delayed by the coronavirus surge in orders – Amazon was using all of their air freight capacity to deliver their own packages.
Now they’re even reportedly shipping packages for the US Postal Service and starting to roll out “logistics as a service” to companies in the U.S.
This makes perfect sense from everything we’ve seen from Amazon so far. For instance Amazon originally built out its server capacity to handle the huge order surge for the Christmas holidays, and found that they had spare server capacity the rest of the year – and a huge capability in managing servers. So they expanded into the adjacent space of cloud computing (Amazon Web Services).
Now they’ve built out a delivery and logistics shipping capacity to handle their own surges, and that gave them tons of extra capacity. Amazon delivers more of its own packages than other shipping services combined. They delivered over 3.5 billion packages a year even before the pandemic, making their own internal shipping business two-thirds the size of UPS.
Amazon has more than,
- 400,000 drivers
- 40,000 trucks
- 30,000 vans
- 70 planes
And since they’re servicing delivery routes already, it’s almost all marginal revenue to pick up and delvier third party shipments. That puts them in a position to undercut competitor pricing. They’ve already tested a lower-priced and lower-fee competitor to overnight shipping services in Los Angeles and London.
It was only just 2016 when the very first Prime Air 767 got its livery. Now if your airline is retiring its 767s it’s probably because of demand from Amazon.
Amazon appears to be succeeding in the world of atoms, not just bits. Cargo by the way is the airline deregulation that everyone agrees worked.