Amazon’s growing shipping operation is profiled at length in a new Bloomberg feature, and the article paints a picture of the e-commerce giant putting together the pieces to build one of the largest and most effective global shipping operations in the world, from centralized distribution hubs, to bulk air transport, to last-mile front door delivery.
While on the surface, Amazon is still a great partner for FedEx, UPS and others, the article suggests Amazon could eventually flip a switch and turn the shipping infrastructure into a business, the same way it turned the scalable network infrastructure it built for Amazon.com into Amazon Web Services, an on-demand computing platform that now makes up a large and growing chunk of Amazon’s overall business.
UPS and FedEx have seen benefit from Amazon’s drive to move commerce online in a big way, but that has come with additional cost, as well as cost pressure from the retailer itself as it builds volume. And Amazon is facing increasing pressure to own the whole stack of its delivery chain, in an effort to increase the immediacy of deliveries for its Prime service members.
Amazon also launched Prime Air officially in August, introducing its own branded cargo planes, 40 of which it will lease from Atlas Air and ATSG over the next two years. It has transport trailers, and a program called Flex to essentially turn everyday drivers with their own vehicles into a last-mile delivery network.
Long term, there’s even more for carrier partners to worry about – Amazon has been very public about its efforts to create a drone-based delivery fleet, and it’s also reportedly looking into driverless car tech via tie-ups with Fiat Chrysler and others.
Underestimating Amazon’s ability to move quickly in industries where it has invested significant resources is always likely going to be a mistake. I can also offer one anecdotal piece of evidence that Amazon is indeed leaning much more heavily on its own resources when it comes to delivery: I order a lot from the site, and for the past three or four weeks at least, whenever I order using Prime and free two-day delivery, the delivery is handled by Amazon’s own courier service, whereas before that it was not uncommon for those deliveries to be made by Canada Post or UPS.
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