There is nothing like a pandemic and a European war to highlight the value of logistics, writes The Wall Street Journal (March 17, 2022). Amazon’s growing fleet of planes shows that it is investing hard to deliver—probably at the expense of FedEx, UPS, and DHL.
Amazon’s cargo airline currently makes an average of 187 flights a day, compared with 85 in May 2020.
Since the Covid-19 crisis started, e-commerce purchases have skyrocketed and a lot of belly-hold space in planes has been removed. Many airfreight companies have seized the opportunity to grow. Amazon has taken the lead. It now has as many as 110 jets—less than DHL’s 202, UPS’ 289 and FedEx’s 474 but a lot more than the 50 it had at the start of 2020.
Having previously leased its planes, Amazon started buying some last year as a flood of parked jets entered the secondhand market and freighter conversions surged. This strategy of building extra flexibility and control may herald more encroachment on the territory of FedEx and UPS. Amazon already provides some “third party” services to companies, and could soon start competing head-to-head in business-to-consumer deliveries.
Even after spending heavily on its own vans, trucks and warehouses, Amazon still relies on traditional logistics firms to deliver a lot of packages, which makes for a strained partnership. But the company hasn’t used its planes much to compete directly with the likes of UPS. It typically flies inventory between warehouses on daytime flights, with a focus on two-day delivery. There are clues that this may be changing. Routes seem increasingly designed not just to align with warehouse needs but also to close geographical gaps.
This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.