- Amazon is adding 12 new planes to its cargo fleet.
- That brings it to 81 total planes.
- Industry watchers believe that Amazon is on track to challenge the US Postal Service, UPS, and FedEx, slashing a total of $100 billion from the companies' top line .
- Visit Business Insider's homepage for more stories .
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Amazon adds 12 planes to its growing air-cargo fleet that's encroaching on FedEx and UPS
Mustafa Yalcin/Anadolu Agency/Getty
Amazon is adding 12 new cargo planes to its fleet, the company announced Wednesday.
One has already been delivered, and the remaining 11 will arrive in 2021. The retailer will have 81 total planes.
ATSG will insure, lease, and staff the additional planes. Amazon works with ATSG, Atlas Air, and, most recently, Sun Country to fly its in-house fleet of planes.
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"Amazon Air is critical to ensuring fast delivery for our customers both in the current environment we are facing, and beyond," said Sarah Rhoads, Amazon Global Air vice president, in a statement. "During a time when so many of our customers rely on us to get what they need without leaving their homes, expanding our dedicated air network ensures we have the capacity to deliver what our customers want: great selection, low prices and fast shipping speeds."
Amazon started to in-house its air cargo operations in 2014.
Thirteen pilots who fly these planes previously told Business Insider that the pressure Amazon puts on its contract airlines undermines safety standards. The average Amazon Air captain makes about 33% less than the average FedEx and UPS captain for flying the same plane once reaching the maximum years of experience.
Amazon's rapidly-expanding logistics operation is on track to cut serious revenue from UPS, FedEx, and the US Postal Service
DePaul University researchers concluded in a May 22 policy brief that Amazon is on track to expand to around 200 planes in next seven to eight years. This would make its air fleet larger than major cargo players like DHL, which has 77 planes, and Korean Air Cargo, which has 104.
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Right now, Amazon is the fourth-largest transportation company in the US behind FedEx, UPS, and the US Postal Service. It delivered 3.5 billion packages globally last year, approaching rivals FedEx (3.9 billion packages), UPS (5.5 billion), and the USPS (6.2 billion).
That's set to boom by 2022, when Amazon is expected to increase its package volume to 6.4 billion, according toa Morgan Stanley analysis from December 2019 . The e-commerce giant could deliver more than FedEx by 2020 and more than UPS by 2022.
Amazon's rapidly growing transportation fleet is not just designed to move your Prime packages. Rather, it's slated to move more and more non-Amazon packages. That threatens traditional delivery companies.
Per Morgan Stanley, if Amazon were to move 6.5 billion more of its own packages by 2022, that would slash up to $65 billion in lost annual revenue for UPS and the USPS. (FedEx is no longer a delivery partner of Amazon , ending its US ground and air relationship with the company over the summer of 2019 .)
The potential loss at the three delivery giants upticks by $100 billion if by 2022, Amazon also moves 3.5 billion non-Amazon parcels that they would otherwise move.
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Dave Clark, Amazon's senior vice president of worldwide operations, said in a 2019 all-hands meeting that Amazon's transportation would be "pretty radically different" from typical parcel carriers.
"I really think the next three to five years is all about what's going to happen in our transportation businesses," Clark said, according to audio obtained by Business Insider's Eugene Kim . "And we're starting to see our first implementations of robotic sort centers, package sortation centers, air hubs, delivery stations starting to deploy this year. And it will begin to scale in 2020 and 2021."
Read more about Amazon's aspirations to become a transportation company
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See Also:
- Tesla could be getting closer to unveiling an EV battery that could last 1 million miles, experts say
- Tesla may have an edge over its rivals during the COVID-19 crisis, an industry watcher says
- VW just completed a $2.6 billion investment in Ford-backed ArgoAI and an exec said the first autonomous vehicle would be the ID. BUZZ
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