How Amazon Plans to Compete with FedEx and UPS

How Amazon Plans to Compete with FedEx and UPS

Amazon invested a lot of money into warehouses, shipping hubs, delivery vans, as well as trucks to ensure it can meet its Prime pledge of delivery in two days or less. Its air fleet is another important component of the company’s logistics machine. Its own cargo planes give Amazon greater control over its own packages and enable it to offer even faster deliveries. 

Currently, Amazon Air operates out of 42 airports in the U.S. Amazon added regular flights to seven airports in the last six months. Hence, 70% of the U.S. population lives within 100 miles of an Amazon Air airport.  Moreover, it is also bringing the tech giant into direct competition with FedEx as well as UPS. 

Analysts expect that the company is on its way to becoming a “top logistics provider” and anticipate it could one day fly packages for other companies, not just items in its own warehouses. Amazon’s latest air cargo expansion suggests its cargo airline is inching toward becoming a more serious competitor to traditional carriers.

 

Amazon Air and interesting facts 

One of the most famous companies in the world launched its air fleet in 2016. But it still relies on outside carriers to fly a portion of its packages. It spent more than $61 billion on shipping in 2020, up from nearly $38 billion in 2019. 

The e-commerce giant plans to change the situation in the future. Amazon made the decision to buy planes. It bought 11 used Boeing 767-300 jets to add to its fleet of leased aircraft. Amazon’s air fleet remains a fraction of the size of FedEx, which has more than 460 planes. Another potential rival UPS operates a fleet of 284 aircraft. 

In August, Amazon opened its $1.5 billion “superhub” at the Cincinnati/Northern Kentucky International Airport. Amazon’s hub has the capacity to handle up to 200 flights a day. This hub features an 800,000-square-foot robotic sort center. 

The company’s flight activity rose 17% over the past six months to an average of 164 flights per day. Researchers from DePaul University predicted the company will expand its flight operations by another 12-14%. 

As of 2021, Amazon is focused on handling its own package volume. So, it won’t be easy to offer its services to other companies. That could change as Amazon Air continues to expand its business.

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