Global e-commerce giant Amazon recently announced it has officially entered the for-hire air cargo market, offering space on its large fleet of cargo jets to freight forwarders and businesses. This move expands Amazon’s air logistics operations beyond its parcel delivery service and positions it to challenge airfreight giants like FedEx and UPS.
The e-commerce leader’s air logistics division, Amazon Air, was created in 2016 to meet the demands of Prime’s one- and two-day shipping commitments. Its fleet now includes more than 100 aircraft, operating from 54 U.S. airports with more than 250 daily flights. Amazon also recently launched a website to allow businesses to book air cargo shipments directly, offering a wide range of services, including one-day shipping, ad-hoc capacity, and charters.
“Amazon Air Cargo is now open for business serving domestic networks across North America, EMEA, and Asia,” the company said in a LinkedIn post. “We’re ready to handle, transport, and deliver your goods safely, securely, and efficiently — on time, every day.”
The launch opens Amazon’s air logistics network to shippers and freight forwarders, as well as 3PLs and postal service providers, with shippers able to tender their cargo for delivery in one day, the website stated.
Businesses can tender shipments as needed, reserve space, or even charter entire aircraft. Amazon Air Cargo will handle various types of goods, including perishables, pharmaceuticals, oversized cargo, and dangerous goods.
Jerry Hempstead, president of Orlando-based Hempstead Consulting, said that Amazon operates a very large network of aircraft dedicated to its needs, adding that its network is similar to those at UPS and FedEx, in that it has the ability to take on larger shipments.
“Amazon has sold ad hoc excess capacity for a long time,” he said. “Now they have formalized the offering. The model will serve best the forwarder market who I suspect will not be as wary of Amazon back-selling them as they would tendering freight to the big two. The detail missing is how one contracts for the service (I’m not aware of them having sales force) and how one tenders freight to them. Yes, Amazon has a fleet of trucks of every size but the network is designed for deliveries, not pickups. Not insurmountable issues but we shall see if Amazon is ready for Prime Time with this offering. In my opinion more competition helps shippers with more options for service and cost and is good for the industry.”
John Haber, president of the parcel business unit for transportation and logistics services provider Transportation Insight, said it is good news anytime there’s some competitive pressure added to the market, with the key question being: what are Amazon’s intentions?
“Is this a short-term play because they have too much capacity or is this a long-term strategy for it to get into the air freight business?” said Haber. “And I think that the jury’s still out on what, what really its intentions are. I think at the very least in the short term, it gives shippers an option. It gives forwarders an option to book air freight. And it looks relatively simple to do. How Amazon executes on it remains to be seen, but they move a lot of air freight. I’m confident that it can do it.
And Rick Watson, Founder and CEO, RMW Commerce Consulting, said that Amazon’s advantage in logistics is always that it can offer space at their marginal cost, undercutting other providers while at the same time providing reliability.
“It does not sound like there is anything special here other than that, but perhaps it is not needed with that value proposition,” he noted. “Amazon seems to be looking at growth areas, and domestic air freight has experienced growth in the last year (4-10% from numbers I have seen), unlike some other forms of transportation which have seen values decline.”
