Amazon Increases Its Logistics Capabilities - Should UPS and FedEx Be Afraid?
Amazon tests logistics as a service
Amazon has been adding to its fleet in preparation for a growing customer base-- purchasing 11 Delta Air Lines and WestJet Airlines planes to be converted from passenger to cargo planes. Amazon is investing in sustainable aviation fuel, solar panels, and leading-edge electric ground service equipment, showing that they’re ready to do things differently than the leading carriers.In May 2020, Amazon launched a “logistics as a service” arm in the UK. Researchers at DePaul University predict we’ll see the same in the US within the next 18 months. When the launch occurs, the researchers believe that Amazon Air, especially the CVG/Wilmington hub, will be critical to the program’s success.
Amazon’s cargo shipments may not be as far in the future as some might believe. A former employee at Amazon’s Baltimore air cargo hub shared that they regularly unloaded USPS cargo from Amazon planes. Similarly, In 2019, Sun Country Airlines, one of Amazon’s air cargo carriers, disclosed that they are required to carry cargo from the USPS on Amazon’s behalf.
What can we expect from Amazon?
The report from DePaul University predicts that Amazon will focus its offerings on retail-to-consumer movements, rather than trying to replicate UPS and FedEx’s door-to-door network.Unlike FedEx, which dropped (and quickly reinstated) 1,400 less-than-truckload (LTL) clients this summer, Amazon plans to take advantage of wasted space in their trucks. CNBC reports that Amazon’s algorithms will connect trucks and sellers-- shipping at a discounted rate to profit off empty space in trucks.