Good for them. There's no real competition between Fedex and UPS. Both raise their rates around 5% every year, even with fuel costs dropping dramatically. The claims process is specifically designed to be difficult.
Might be more interesting if Amazon decides to open up to outside customers and re-instates real competition. Both UPS and Fedex had better rates and service when DHL was still competing with intra-US shipments.
I find it interesting that the Google, Apple and especially Amazon have become very successful by going against the orthodoxy of the last few decades which was outsourcing everything that wasn't a core business because you can't possibly do it efficiently.
If these companies followed prevailing MBA business thinking, their products and services would be as mediocre as many other large but floundering fortune 500s.
Perhaps most interestingly, Amazon appears to be in negotiations to purchase 20 brand new 767 freighters directly from Boeing.
As companies grow bigger, the de-modularization of the economy increases. Not something to be very excited about.
I would love to see the financial analysis of this move. Paying for the leases on 20 737-300Fs is not going to be cheap, but it must be letting them cut costs somewhere important.
If you're really interested in looking more at this, look at the flightaware stats for the flights going out of KILN -- Wilmington, Ohio.
Outside of a Corporate Jet going to New Orleans (R&L Carriers), it's all ABX Air traffic...and it's going to airports near major Amazon Warehouses (Lehigh Valley/Allentown was the biggest one that came to mind when I was looking at the flights).
Atlas (ABX Air Competitor) doesn't have a lot of wiggle room -- they're doing freight contracts for DHL and PAX contracts for the Oil and Gas companies to Africa right now.
I think what Amazon's doing right now is moving or rebalancing the freight -- something that they've traditionally done via semi -- in order to get it in place for the holiday season. It will be interesting to me to see if these flights continue to keep up during the slower months in the beginning of the year.
Amazon Air ® .... They will probably buy the planes and lease excess capacity to FedEx, UPS, USPS, DHL, et al.
I just wrote a post about Amazon's air freight operation and how it may affect UPS and FedEx
Lately, I've been getting my Amazon deliveries by street-clothed people driving around in rental vans. (in NJ)
I wonder how this reflects on the corporate-state relationship between USPS and Amazon?
I believe logistics has become a weakness for Amazon. Other retailers seem to handle most of their warehousing and logistics on their own (?). Amazon reduced the need for warehousing but seemed to have become totally dependent on other companies for logistics. For long time they benefited from tax breaks and users willingness to wait few days for packages to get delivered. With price matching offered by several other retail stores, and Amazon thinking of starting their own retail stores, it makes sense to invest in their own logistics as well. I guess they would like to differentiate themselves in the long run as a ship-to-door retail company with excellent customer experience.
This article and the comments here seem to focus on the cargo flight portion of delivery, but how are they planning on getting it to the door?
I'm wondering if Apple will start doing the same.
Interesting! Maybe the plan is to launch drones directly from the flying 767 the same way military planes drop vehicles!
Amazon handling its own logistics is going to be a big problem for UPS. I have a friend who works for the AP and recently visited a large distribution facility for a story. He said UPS does over 1M packages a day and anecdotally he said it seemed like every other package was Amazon or Zappos (an Amazon company). I wonder how UPS will react.
I was in awe hearing about the incredible efficiency of the operation. Apparently the delivery of 1M packages happens between the hours of 1am and 4am and over 300 planes fly in to be loaded before heading out later that morning.