Amazon may soon give FedEx, UPS and USPS the boot

By Shawn Knight
Nov 24, 2015
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  1. Amazon is reportedly the entity behind a secretive air cargo operation launched this past September codenamed “Aerosmith.”

    According to an investigative report from Motherboard, the project is being run by holding company Air Transport Services Group (ATSG) out of the Wilmington Air Park in Wilmington, Ohio. The facility, described as a non-passenger airport with two runways and major sorting / cargo capabilities, was once used by DHL. The airport has been largely underutilized ever since the courier moved its operations elsewhere in 2008.

    The publication has learned that the “mystery” company has been conducting flights to and from Wilmington Air Park with airports in Allentown, Pennsylvania; Ontario, Canada; Tampa, Florida and Oakland, California. Coincidentally, Amazon operates distribution centers within 60 miles or less from each destination airport.

    Paul Cunningham, a spokesperson for ATSG, wouldn’t disclose who was behind the operation as he was bound by a non-disclosure agreement. He did, however, reveal that the client was moving general consumer goods.

    DHL, FedEx and UPS all confirmed that they weren’t behind the operation. In a statement from Amazon, the company simply said that it has long utilized air capacity through a variety of great partners to transport packages and they expect that to continue.

    Last month, a person reportedly familiar with Amazon’s plans told DC Velocity that the e-commerce giant was assembling a team of high-level executives to lead its push in developing its own transportation network.

    If true, the move makes a lot of sense at it would allow Amazon to decrease its dependence on major couriers like FedEx, UPS and the US Postal Service. Doing may also help Amazon offset shipping costs and boost profits, no doubt good news for the company and its investors given its thin margins.

    Permalink to story.

  2. Guest17

    Guest17 TS Enthusiast Posts: 92   +37

    If any business is ripe for disruption, it's the shipping industry. Ups is still sticking its customers with gasoline surcharges while the price of fuel has fallen to less that $2.50 per gallon. The USPS nickels and dimes postal customers at every turn. Amazon has built is cred on hardcore customer service. Having its own shipping service will only make it that much better.
    EClyde likes this.


    It will never be profitable...way cheaper to allow another transporter to deliver no matter what.
  4. RBBrittain

    RBBrittain TS Rookie

    This article does NOT say who's doing the final mile. I suspect this is no different than what Amazon's already doing, especially for Prime customers -- handling packages themselves till they reach a local USPS office (or LaserShip, etc. where available) for final-mile delivery. (That's the basis for USPS agreeing to deliver for Amazon on Sundays; Amazon itself drops them off at a local USPS facility that morning, with a small number of mail carriers on hand to complete the Sunday deliveries.)
  5. psycros

    psycros TS Evangelist Posts: 1,295   +663

    Amazon orders constitute something like 20% of all UPS shipments. That's more than enough reason to consider investing in your own delivery infrastructure. The employees will undoubtedly be paid much less than they would be working for an established shipper so it will probably pay for itself sooner rather than later. Also, by only needing to handle Amazon deliveries shipments will be sped up considerably. It makes plenty of sense for an organization of Amazon's size to at least give this a try. Chances are that it will be limited to the bigger markets for now but it proves successful don't be shocked to see a cow-patterned panel van rolling by you in a couple years.
    EClyde likes this.
  6. RBBrittain

    RBBrittain TS Rookie

    In other words, Amazon is already acting as its own zone-skipping consolidator, like UPS Mail Innovations (UPS SurePost is slightly different -- basically just UPS Ground to the post office), FedEx SmartPost, and DHL eCommerce (fka Global Mail); adding an air component only makes it easier to meet Prime deadlines in-house from more warehouses. The only loss this represents to the carriers is the need to use UPS/FedEx 2-day air or USPS Priority Mail for Prime shipments from outlying warehouses; USPS will probably make enough money off extra final-mile deliveries to offset any reduction in Priority Mail.
  7. RBBrittain

    RBBrittain TS Rookie

    I doubt Amazon will actually launch its own panel vans, except maybe in super-high-volume markets like Seattle or NYC. USPS, despite its troubles, is still by far the most efficient final-mile carrier for small packages; only USPS visits every address in America 6 days a week (even if they cut back to 5 days they will still deliver packages for everyone on Saturday, and presumably for Amazon on Sunday), *and* they don't charge extra for residential deliveries like UPS & FedEx.
  8. Jaydawn

    Jaydawn TS Rookie

    If that were true it wouldn't be profitable to be UPS or FedEx.. But it definitely is.
    How would it be less profitable to not pay them the extra money to do it? That's like saying it's not cheaper to fix your car yourself and you're better off paying Firestone.
    psycros likes this.
  9. Squid Surprise

    Squid Surprise TS Guru Posts: 813   +246

    Where are the drones?!?!?!!? That's where it's gonna be at :)
  10. EClyde

    EClyde TS Maniac Posts: 616   +143

    ha ha ha
  11. jacki2015

    jacki2015 TS Rookie

    How do you figure USPS nickels and dimes anyone? They are by far the most economical carrier in the world, with by far the largest delivery network. Their prices easily beat UPS or Fedex. In fact they are so economical, that UPS and Fedex ship many millions of their parcels through USPS. Your way off on that statement. Even Consumer Reports has rated the USPS as the most economical out of the 3 big carriers. And as for Amazon, how much do they really think they will save, as the are only paying USPS $2 per parcel no matter the size.
  12. tomcod

    tomcod TS Rookie

    People are dismissing the fact that self autonomous vehicles are coming. This means semi trucks delivering goods will be automated for getting goods from airports and ports to distribution centers. From there we can easily have cargo vans being autonomous for moving goods from regional distribution to local distribution centers. The network of transportation will definitely be changing down the road. Last mile for delivery can be easily done with drones. Its just a matter of time.
  13. dmadesign

    dmadesign TS Rookie

    I was going to say the same. It's the 20 can beer case or 11.5oz pound of coffee. Couldn't see it happen to a nice bunch of thieves.
  14. nellaj

    nellaj TS Rookie

    The packages must still be postmarked...
    The Postal Service acquired mail processing machines for such an occasion such as this.
    Amazon does not have the machines.
    The Postal Service does not make money by delivering mail, it makes it's primary revenue from processing it.
    Each machine processes 35,000 pieces per hour 24/7/365.
  15. psycros

    psycros TS Evangelist Posts: 1,295   +663

    Its even worse than most people know: FedEx and UPS actually hand off a lot of their deliveries to the USPS after you pay them to do the job. So that premium you paid for third party delivery ends up being pure profit while your tax dollars subsidize the real shipper.

    Please explain how Amazon would need to postmark anything being shipped from their own warehouses via their own trucks to their own customers. That would be like saying that Lowes has to postmark every fridge they deliver to someone's home.
  16. psycros

    psycros TS Evangelist Posts: 1,295   +663

    "Last month, a person reportedly familiar with Amazon’s plans told DC Velocity that the e-commerce giant was assembling a team of high-level executives to lead its push in developing its own transportation network." (emphasis mine)

    That sounds pretty open-ended to me. They'll do whatever makes sense economically. Say what you will about Amazon but they know how to make money.
  17. Jennidc

    Jennidc TS Rookie

  18. 151rum

    151rum TS Rookie

    My girl works for UPS, she makes 23 bucks an hour as a "package handler," that is, she moves boxes from one conveyor to another. About as unskilled labor as you can get. She seems to think she is going to retire there, I keep telling her that she needs to prepare herself for when she loses her job. She is union, thinks that protects her, I tell her that her union will be their downfall, seriously, 23 bucks an hour, part time, horrible work environment that is filled with grossly overpaid unskilled nobodies that hardly work, harass other workers and dismiss management. One of her fellow employees that has been there 15 years comes in angry every night and makes sure anyone around her knows she is angry and sets about making sure no one around is happy, things like throwing boxes, packages, cexustomer packages... at other employees that walk behind her with intent on hitting them, they have tried firing her but the union backs her 100% and nothing changes. Now dont get me wrong I like my girl but I think everyone over there could use a little reality check and this might just be the thing to do it. The loss of Amazon delivery's would cripple UPS and Fedex, which I see as a good thing for customers, especially with the way these companies handle customer goods. The blow to the USPS, which has really only been living off the scraps of the other two would really suck, the only way they have been able to keep Saturday service is Amazon deliveries. If Amazon is successful, which they probably will be, will likely result in far far more jobs being lost then being created given Amazons love of automation. Amazon will save millions, consumers will see no drop in prices or cost, thousands will lose jobs and the ones that find work with Amazon will see huge pay decreases. Overall an awesome move for Amazon but at what a cost to our economy and consumers? This will end badly for everyone. well, except Amazon...
    seansplayin likes this.
  19. mgwerner

    mgwerner TS Enthusiast Posts: 31   +23

    With attitudes like yours, no innovation would ever occur.

    A smart company not beholden to unions like Amazon will look for ways to cut costs first to themselves, then to customers. That is what businesses do, they make money for themselves. All of the Liberal illogic that profit is evil is simply stupid.

    Eventually, in high-volume markets, Amazon will deliver door-to-door, with their own aircraft and self-driving vehicles or drones. Those jobs that are lost will be scutwork. So, get a decent education, put down the phone and the Salon page on your tablet, and actually be of value to the company for whom you work.

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