Amazon is beginning to take over the world and this hasn’t been a secret by any means. What started as an online click-and-mortar retail shop has now turned into a conglomerate focused on moving and storing lots of things as quickly and efficiently as possible. I buy most of my indulgences from Amazon and I’ll be the first to admit (sadly) that my life and things I do are somewhat tied to how quickly Amazon can provide it to me.
Enter “Prime Air”
Prime Air is Amazon’s newest creation in the quest to make the world better. Rather than focusing solely on the schedules and capacity of existing freight carriers and logistics firms like UPS and FedEx, Amazon is taking matters into their own hands.
On Friday, Amazon unveiled their first of 40 planned aircraft for their new air carrier fleet. The airplane type is a Boeing 767-300F and it’s being leased from Atlas Air. Amazon is smartly leasing all 40 aircraft, opting to split the deal (again, smartly) between Atlas Air and Air Transport Services Group. Atlas Air and ATSG will operate the flights on behalf of Amazon.
Amazon SVP of Operations Dave Clark spoke to Recode about the plan:
“You can almost think about the difference between commercial flight and private flight. We have the ability, with our own planes, to create connections between one point and another point that are exactly tailored to our needs, and exactly tailored to the timing of when we want to put packages on those routes — versus other peoples’ networks which are optimized to run their entire network. We add capacity, we add flexibility, and it gives us cost-control capability as well.”
Clark went on to further explain how Prime Air will be most beneficial for east coast-west coast routes and for routes that are lacking the robustness and support from existing freight companies.
In a regular business environment, it’s pretty obvious that Amazon’s ambitious plans to optimize logistics and the apparent encroachment on UPS/FedEx might cause somewhat of an uproar. If you think about it, though, UPS and FedEx hold many of the cards in this situation. They’re the leaders in this space and will still have control of a vast percentage of Amazon’s business.
It would seem Amazon agrees. Chief Financial Officer Brian Olsavsky commented on this during a March analyst call:
Olsavsky reiterated that Amazon was looking to supplement, not replace, the capacity of its delivery partners.
How Might It Affect You?
Combining Prime Air with existing freight vendors will theoretically create a systemwide network so robust that two and one day shipping times will be executed with greater accuracy. The idea is to not only build out the network, but also improve on-time efficiency and lessen the dependence on local, often problematic carriers like A-1 and LaserShip.
If all goes according to plan, all of this translates into a better Amazon experience for us.
As always, if you have any questions, feel free to e-mail me… dominic -at- theshortfinal.com