Amazon.com Inc.’s heightened bid to grow its logistics network has never made more sense as war rages on in Ukraine and goods movement remains restricted or slowed in parts of China due to a Covid-19 outbreak.
The company’s Amazon Air segment appears to be slowly creeping toward greater capacity to assist the e-commerce behemoth with its fulfillment, begging the question of whether its moves could eventually send the likes of FedEx, UPS and U.S. Postal Service scrambling to compete.
Amazon’s fleet is nowhere near the footprint of those market players, but its ambitions suggest it could be one day.
That’s the word from a study released this week from DePaul University’s Chaddick Institute. Chaddick focuses on transportation planning and publishes briefs on Amazon Air twice a year using information from flight tracking websites, geographical analysis and Federal Aviation Administration fleet registrations among other sources in its analysis.
“We expect Amazon to seek a greater piece of the delivery business being handled by FedEx, UPS and the U.S. Postal Service that does not involve purchases on its online platform,” the report’s researchers said.
The outlook suggests the company’s primed to eventually move toward third-party, business-to-business logistics.
Currently Amazon Air “is primarily designed to support inventory movements between its warehouses and fulfillment centers,” the report said. Amazon Air, in other words, currently has had little to do with the movement of product that is outside of its fulfillment centers and at the point of manufacturing.
“Even so, speculation is growing that this will change, and that Amazon will more aggressively enter the third-party shipping business in direct competition to FedEx and UPS,” researchers said.
“…We feel that significant transoceanic flying is coming, due to the mounting supply chain problems facing nearly all retailers and the sheer scale of Amazon’s logistical needs. Bringing more transoceanic shipping ‘in-house’ will give it heightened control over its supply chain,” researchers pointed out.
The predictions are based on overall growth and also the capacity of the existing air network.
Amazon Air activity increased 14.3 percent from August 2021 to March of this year to total 187 daily flights, with a fleet of cargo planes that’s gone from 73 in August of last year to 88 by mid-March of this year.
FedEx counts 695 aircraft and UPS has 595, by comparison.
Much of Amazon’s flight movement centered around Cincinnati and Wilmington, Ohio; Fort Worth, Texas; Seattle, Wash; San Bernardino, Calif. and Europe.
Amazon Air, in Europe alone, has gone from eight to 18 flights daily between August 2021 and March of this year. Flights not registered to Amazon Air, operated by partner companies, totaled 38 daily European flights.
Bloomberg reported last year Amazon was in the market to buy 10 refurbished Airbus A330-300 planes, in addition to Boeing 777-300ER plans.
That would make sense with the Chaddick researchers’ findings that Amazon continues to expand its hub system to more and more households in the U.S., which would make it easier to fulfill promises of expedited shipping.
The number of U.S. households that are located within 100 miles of an Amazon Air-serviced airport has ticked up to 75 percent, compared to 60 percent a year ago.
The Cincinnati/Northern Kentucky International Airport (CVG), where Amazon last August bowed its 800,000-square-foot Amazon Air Hub, is to eventually ramp up to serve as the operational hub for the airline’s more than 40 sites.
Items shipped from metropolitan Cincinnati can make it to 90 percent of the U.S. population by the next day, according to the report. Packages sent from that same point could make it in two-day delivery to most of the U.S., with more remote areas requiring a third day.
The CVG hub still has room to grow, with the addition of even just six airports that could help further expand the reach of two-day delivery.
“At the Cincinnati CVG hub, which formally opened in August, Amazon Air grew steadily but not dramatically,” the report found. “To our surprise, the airline has not yet made a major move there since its opening. The ‘superhub’ is not, at least for the moment, dramatically altering the airline’s geographic orientation.”
Amazon Global Logistics, a branch off its Fulfillment by Amazon division, pushes ocean and air transportation to businesses. It touts the services to companies looking to bring product into the e-commerce company’s fulfillment centers from China and Hong Kong to the U.S., U.K., EU and Japan.
In fact, it continues to woo customers with promotions, offering as much as 8 percent off ocean bookings 60 days after being onboarded into the system.
Amazon Air estimates its flights can usually get product to a fulfillment center in seven days.