Amazon Secretly Building an Air Cargo Arm?
In 2013, right around the time that Amazon announced that Sunday delivery deal with the USPS, pundits were pointing out that Amazon had grown large enough and was shipping enough packages on a daily basis that pretty soon the internet retailer was going to have to either acquire FedEx or UPS – or build its own shipping company.
The truth of that conclusion was ultimately proved a few weeks later when failures on the part of UPS and other shipping partners during the holiday shipping rush left many customers without gifts under the tree on Christmas day.
Amazon went on to invest in logistics firms in the UK and in France, but according to Motherboard Amazon is choosing to build its own service here in the US.
A secretive new air transport company started operating out of an ex-DHL facility in Wilmington, Ohio earlier this year. No one knows who owns it, but Motherboard reports that "Aerosmith" is leasing four cargo jets from a couple different transport companies and running daily flights:
Through a contract like this, called a wet lease, airlines rent out their planes, crews, and maintenance and training teams to carry out projects and ship products for clients. The patchwork operation allows a company to move freight around the world without purchasing planes of its own.
The project is an air freight transportation operation flying four flights a day, Cunningham said. The hub-and-spoke operation is based out of Wilmington (ILN) with flights to and from four other confirmed airports: Allentown, PA (ABE), Ontario, CA (ONT), Tampa (TPA) and Oakland (OAK). Amazon has distribution centers about 20 miles from ABE and ONT and within 60 miles of TPA and OAK.
The destination airports have confirmed that flights are coming in from the Wilmington facility, but were unable to say what was on the flights. And as for who is leasing the Wilmington facility, no one is talking.
Paul Cunningham, a spokesperson for ATSG, the Ohio-based aviation holding company that operates the facility, has declined to say whether the company behind Aerosmith was Amazon, citing a nondisclosure agreement. “It is general consumer goods,” he said of the cargo being shipped. “I can’t be specific, we just receive the freight, load it on and move it. It’s not something that it’s obvious what it is.”
Very little is known about the specifics of the operations, but one thing we do know is that UPS, FedEx, and DHL have all denied involvement, while Amazon has neither denied nor confirmed its role. Amazon has only said that "We’ve long utilized air capacity through a variety of great partners to transport packages and we expect that to continue."
According to its FCC filings, Amazon spent $4 billion on transportation costs last year, out of annual revenues of close to $90 billion. That’s money Amazon could be saving by moving more of its logistics in-house.
Furthermore, a report from financial analysts at RW Baird found Amazon could generate $5 billion a year in revenues by investing in its own logistics services.
In short, the question today isn’t whether "Aerosmith" belongs to Amazon but what the retailer plans to do with it. For example, does Amazon plan to defray its operating cost by running a shipping company like UPS?
Amazon already has local delivery in much of the US, and they have that contract with the US Postal Service, so all they would need to deliver your packages for you would be a logistics backbone – like Aerosmith, for example.
Of course, 4 planes won’t get Amazon there; FedEx operates over 600 cargo jets (globally), so even if Amazon were focused on just the NA region they’re still going to need dozens of not hundreds of planes.
Just think: By this time next year the APS, the Amazon Parcel Service, could be delivering your stuff and offering to guarantee that it would arrive by Sunday.
images by theglobalpanorama, Marcin Wichary
Mike Hall November 24, 2015 um 9:07 am
You mention Amazon investing in a courier company in the UK (and following your link I see that this is Yodel, a company which does not have the best of reputations with the people it is delivering to).
However, a lot of my recent deliveries have been by Amazon Logistics, which I assume is an in house courier company. So they seem to have built their own service in the UK just as you suggest they are doing in the USA.
Nate Hoffelder November 24, 2015 um 9:43 am
New to me, thanks.
Given Yokel’s reputation, Amazon may have decided to put their own branding on its trucks – or launch a completely separate service with a better org schema.
Chris Meadows November 24, 2015 um 11:51 am
This is old news. Bezos is already thinking ahead. His other company, Blue Origin, has just successfully landed a rocket after use, beating Elon Musk’s SpaceX to the punch. So, he’s clearly already planning a space cargo arm.
How long before astronauts on the ISS will be able to order for Amazon Prime delivery?
Nate Hoffelder November 24, 2015 um 12:26 pm
Eh. It’s not worth it unless Amazon can get it there in two hours or less.
Mike Hall November 25, 2015 um 6:50 pm
Nate, a somewhat belated reply to your comment.
Amazon Logistics delivered a couple of parcels earlier this evening and there was definitely no branding on the van. I suspect the driver is a contractor supplying his own transport (which seems to be the case for a lot of the UK courier companies).
Nate Hoffelder November 25, 2015 um 7:09 pm
That sounds more like a contract courier than an Amazon service.