Whether it’s by freighter, drone, truck or automobile, it would appear Amazon is on the move, literally, to launch its own logistics network and to distance itself from the integrated express carriers.
Further evidence that Amazon is up to something now includes news from London’s Evening Standard that the e-commerce giant has been operating a 737 chartered through German logistics firm DB Schenker between the U.K., Poland and Germany since mid-November. Flying five times a week, the aircraft has made the rounds between Katowice, Poland, to Luton, East Midlands or Doncaster airports, then back to Poland via Kassel, Germany. All of these locations are near one of Amazon’s European distribution hubs, known as “fulfillment centers.” More charters could be coming to Spain and Italy, the paper said.
Additionally, after working side by side with UPS for years, Amazon’s symbiotic relationship with the U.S.-based integrator has been strained in recent week, said the Wall Street Journal. Amazon’s shipping costs totaled 11.7 percent of revenue in the third quarter, up from 10.4 percent a year ago, the article said, so its goal is to reduce its dependence on third-party carriers, such as UPS. The past two peak seasons saw UPS overwhelmed with Amazon orders, resulting in packages not arriving in time. This added up to US$200 million in extra cost for UPS in 2013, because Amazon persuaded UPS to underwrite millions in customer refunds.
All of this comes on the news broken by our sister publication, Cargo Facts, that Amazon is creating a logistics operation that includes overnight air operations in the U.S., potentially including the acquisition of at least 20 freighters. The U.S. Postal Service handled 40 percent of Amazon’s volume last year, while UPS is estimated to have carried 20 to 25 percent, and FedEx 15 to 20 percent, of Amazon shipments.
It might be that Amazon fears that UPS, USPS and FedEx are standing in the way of its growth. According to theEvening Standard, Colin Sebastian, an analyst at Robert W. Baird, said “Amazon is pretty fed-up with the third-party carriers being a bottleneck to their growth.”
As far as Amazon being concerned about what’s good for UPS, or any of the other carriers, Satish Jindel, a parcel-industry analyst told WSJ “their (Amazon’s) interest is in getting control over logistics.”
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