Amazon, Atlas in cargo jet deal
Amazon.com could take as much as a 30 percent stake in a large cargo carrier, its second such deal this year as the ecommerce giant seeks to control more of the delivery process, from factories where goods are made to the doorsteps of customers.
As part of the agreement, Atlas Air Worldwide Holdings will acquire and operate 20 Boeing 767-300 freighters for Amazon, according to the airline Thursday. The deal mirrors a March transaction with Air Transport Services Group and would double Amazon’s cargo-hauling fleet to 40 Boeing 767 freighters.
The Seattle-based retailer is moving quickly to build up its delivery network, aiming to reduce its dependence on United Parcel Service and FedEx as it expands its Prime membership service that delivers some orders in as little as one day. In light of the company’s aggressive moves, the question for some analysts is how much Amazon intends to encroach on the package carriers’ turf.
“The debate right now is where will Amazon stop and if this is meant to complement or substitute the legacy parcel carriers,” Morgan Stanley analysts Ravi Shanker and Brian Nowak wrote in a note. “We believe UPS/FDX need to at least keep one eye on the rear-view mirror.”
On an earnings conference call last week, Amazon Chief Financial Officer Brian Olsavsky reiterated that Amazon was looking to supplement, not replace, the capacity of its delivery partners. Kelly Cheeseman, an Amazon spokeswoman, declined to comment beyond Atlas’s statement.
Even a small fleet of planes will help Amazon reduce costs, said Jarrett Streebin, chief executive officer of EasyPost, a San Francisco company that helps retailers coordinate shipping labels and tracking with delivery companies.
Amazon can use the planes to quickly move inventory — especially small electronics —around the country to respond to demand spikes, which will ease its reliance on FedEx and let it meet demand with less inventory, Streebin said. The planes help the company accomplish speedy delivery without the cost of abundant inventory in each warehouse around the country, he said.