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, though, it appears that they are close to building a shipping network to carry third party packages. And it 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.
They’ve already tested a lower-priced and lower-fee competitor to overnight shipping services in Los Angeles and London. And they’re nearing critical mass to scale,
With more cargo planes about to join its dedicated fleet, Amazon’s freighter operation is on course to climb to about 160 flights a day by late spring, almost double where it was last May.
The expansion is positioning Amazon Air to move ahead with its plans for next-day standard delivery in North America, and it is nearing critical mass to carry third-party parcel traffic.
Credit: Amazon
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.
Nice article. Relevant and informative. It would be interesting to understand how there on time performance compares to FedEx and UPS
Um, have you ever had a package delivered by Amazon? Amazon is a pitiful delivery service compared FedEx and UPS. When your package is left in the rain, at the wrong address, or blows away from your door, come back and tell us how great Amazon shipping is! And, if you live where Amazon does not have a facility and probably will never have a facility, Amazon packages will still be delivered by USPS or UPS. Besides all of Amazon’s delivery drivers are contractors. All of them! Why would any company trust their products/services to Amazon for delivery? Especially when Amazon’s priority is their own packages?
Amazon (and probably you as well) think that overnight shipping is a piece of a cake. It is not! Last week, FedEx and UPS networks both failed in the extreme cold, ice and snow. There were centers that received no aircraft for 4 days. Both companies trucked all of their freight for the better part of last week. Do you think Amazon was any better? It wasn’t! Research “United Air Express”, United Airlines failed attempt to enter the overnight delivery business. UPS and FedEx are established businesses with “deep moats”. The only way Amazon can come close their services is by buying either of them. Which I doubt the government will allow that.
I completely disagree with JohnB. Anecdotal stories of packages left in the rain don’t really prove anything. The scale at which Amazon operates and the performance levels they are able to achieve at that scale are amazing. FedEx and UPS are great companies and aren’t going anywhere, but Amazon is at the point now where they are so powerful/well capitalized/disruptive that they can address virtually any global marketplace that has nothing to do with buying socks online (healthcare, transportation, education, whatever) and pretty much become the biggest/best player in that market in a couple of years.
Why do people keep giving Amazon money?
I refuse to shop there, or buy any of their products.
Why are people supporting companies like this in 2021?
Amazon can’t survive without USPS delivering a majority of their parcels. They know it but ignore this fact. Whatever logistics network they build still won’t be able to deliver without USPS.
@George People give Amazon money because it’s super convenient to [go to a single website and order almost anything you can think of at a competitive price].
Wonder if/when Amazon will get into the pizza delivery business?
“Now if your airline is retiring its 767s it’s probably because of demand from Amazon.”
Really? Passenger carriers are getting rid of 20-30 year old wide-bodies because, based on their market projections, they aren’t worth holding on to. Pricing in the secondary market for airframes would have only a marginal impact on that analysis.
The carriers are bleeding red ink and Amazon is in a position to scoop up some well priced used aircraft. I’d be very surprised if Amazon is paying more today than it would have 18 months ago
There is no end to the GREED at Amazon. I will never use them.