While Amazon flights are mostly moving goods from one Amazon warehouse to another — and the company still relies on UPS, FedEx and the USPS — the growth of its new cargo fleet underscores that Amazon is serious about becoming a big presence in air freight. Over the past few years, Amazon has expanded its logistics capabilities and taken more hands-on control, adding not only planes but also truck trailers and fleets of urban drivers. This is a costly strategy, and one that carries fresh risks if things go wrong.
This holiday period will be a test of new systems, new process, new relationships, and a test of the labor markets. In previous years delayed packages could be blamed on the carriers, but that will apply less as Amazon takes matters into its own hands.
The rise of e-commerce has led to a surge in mailed packages — something that all carriers will be struggling to deal with this season. And we are still at the front end of a dramatic shift (without much historical data) in the way consumers behave. Faced with that uncertainty, Amazon is betting that its own networks will eventually prove cheaper and more reliable than the alternatives.
Classroom discussion questions:
- Is Amazon moving away from its core competence?
- What are the advantages and disadvantages of the new fleet?