Amazon’s Plans And Partner For Air Delivery

Amazon is going airborne with a new shipping partner.

The Wall Street Journal reports that the eCommerce giant, in an effort to offset rising delivery costs, has entered into a deal with Air Transport Services Group (ATSG) to lease as many as 20 of its Boeing 767 planes to facilitate air delivery within the United States.

It’s another step, notes the outlet, on Amazon’s part to move away from having to rely substantially on major carriers, such as UPS and FedEx, for the transportation of its merchandise to (and from, in the case of returns) consumers. Already in the process of establishing its own network of ground-based couriers and additional warehouses around highly populated areas, Amazon will now — as a result of its arrangement with ATSG — control more than 15 percent of its annual deliveries, Stephens Inc. Analyst Jack Atkins told WSJ.

“Amazon clearly wants to grow, and they need capacity to do so,” commented Atkins to the outlet. “UPS and FedEx are hesitant to build it out solely for one customer.”

WSJ shares that, back in January, commenting on the fact that Amazon’s delivery expenses had totaled 12.5 percent of its sales in the fourth quarter of 2015 (an increase from 10.9 percent in the previous year), during which the company spent $4.17 billion on shipping (a 37 percent year-to-year increase), Amazon Chief Financial Officer Brian Olsavsky said that delivery partners, such as UPS, FedEx and the U.S. Postal Service, “are just no longer able to handle all of our capacity that we need at peak. We have had to add some resources on our own.”

It would appear that Amazon is doing just that.

While Amazon did not comment on the WSJ story, a UPS spokesperson stated that the carrier “will continue to work closely with Amazon and all our customers to help them solve their growth and customer service challenges,” and FedEx commented that “Amazon continues to be a valuable FedEx customer.”