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Home >  News >  Logistics & Manufacturing >  Amazon to Lease 20 Boeing 767s to Build Its Own Delivery Network
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Logistics & Manufacturing

16 maart 2016

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Amazon to Lease 20 Boeing 767s to Build Its Own Delivery Network

Amazon.com Inc. is stepping up plans to build its own air delivery network, saying it will lease 20 Boeing Co. 767 freighters from Air Transport Services Group Inc., sending shares in the lessor up the most in almost two years.

The agreement shows Amazon’s commitment to expanding its own logistics network to make deliveries faster and more efficient. The Seattle-based company wants to lessen its dependence on United Parcel Service Inc. and FedEx Corp., which have sometimes run into delays during the busy holiday season.

“This is the first formal confirmation from Amazon that they are in fact pursing an air transportation network and more logistics services,” said Colin Sebastian, an analyst at Robert W Baird & Co. who rates the stock outperform. “We can dispense with all the speculation and actually look at something that’s real and happening.”

Shares of Air Transport Services surged the most since May 2014, rising 17 percent to $13.73 at the close in New York. As part of the deal announced Wednesday, Amazon also has the right to buy as much as 19.9 percent of Air Transport Services common shares over five years at $9.73 per share, based on its Feb. 9 closing price. Amazon shares were little changed at $559.47.

Source: Bloomberg.com  

 

Boeing 767.jpg

 

A reaction published in The Financial Times:

This is a mistake by Amazon; running an airline is not the same as running a warehouse.  They will experience and understand why the system can't cope during their first bad weather pre-Christmas shopping period.  They will also understand the non-revenue traffic they will be obliged to carry just after Christmas with planes full of returns.

Amazon will have to get into third party carriage as there will be no freight in late January or July when folks are on vacation.  You need a heck of a lot of books to fill a 767 (around 20+ tonnes a flight)- and $5 book delivery by 767?

They will be dragged into other people's freight activities simply serving to fill their fleet of planes rather than how to serve customers more effectively, leaving flying to the airlines.

Those 767 leases are cheap, power-by-the-hour operations.  Air freight is in the doldrums, but wait until fuel is $100+ again and demand picks up elsewhere - does Amazon dump its own business for better carryings elsewhere?  This is business school case study stuff.

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