Amazon Reportedly Building Overnight Airfreight Operation, Leasing Boeing 767s

Megalith

Megalith

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With all the transportation news/rumors lately, I’m guessing that Amazon is really starting to move away from UPS, FedEx, and USPS to some extent.

Amazon ships most of its parcels through United Parcel Service, FedEx, and the United States Postal Service. The change to an inhouse logistics venture would seismically change the airfreight industry, as the majority of new air cargo activity around the world has come from e-commerce companies — and much of it from Amazon, in particular.
 
It's not easy. A trained monkey can lease a 767, but the real challenge comes from ground logistics. You need a massive amount of ground support (and space at airports) to make this viable. Makes me wonder whether they will start to utilize out of the way regional airports with long enough runways but little traffic for this.

Air logistics are all about efficiency and the most successful carriers keep their planes in the air for more than 20 hours per day, some even over 22 hours.

It will be interesting to see whether Amazon can fill their flights to capacity on all legs, that will likely be their biggest challenge.
 
Thuleman said:
Air logistics are all about efficiency and the most successful carriers keep their planes in the air for more than 20 hours per day, some even over 22 hours.
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Wow. Is that a typical day or average for all days in a year?
 
I see this as having a bigger impact on UPS and FedEX than on the USPS. Amazon, UPS and FedEx all already use USPS extensively for the "final mile" because it is by far the cheapest option to get the parcels into the hands of the residential consumer.
 
Thuleman said:
Air logistics are all about efficiency and the most successful carriers keep their planes in the air for more than 20 hours per day, some even over 22 hours.
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No, no they don't. Even this time of year they don't. Air freight actually has very low utilization which is why the operating economics of older aircraft work. Passenger aircraft, on the other hand, spend much more time airborne than freighters. Not to mention, with the super twins lots of things now move belly freight so you don't need your dedicated freighters making as many runs most of the year when you can get it done cheaper and faster in an LD3 on DL, KLM, AA, CX, EY, etc.

It will be interesting to see whether Amazon can fill their flights to capacity on all legs, that will likely be their biggest challenge.
Click to expand...

Should be easy if all they are doing is managing fulfillment center to fulfillment center product movement.
 
the_servicer said:
Wow. Is that a typical day or average for all days in a year?
Click to expand...

It's not typical anytime. The only thing that could be misinterpreted to coming close is when FedEx Express runs their empty surge and recovery flights but that isn't the same aircraft flying loops for 20 or 22 hours straight. Commercial passenger and freighter aircraft do not have that kind of endurance and they can not air to air refuel. Not to mention, you can't keep a flight crewed that long unless you are pulling multiple flight crews on board and have the appropriate crew rests which destroys your ability to move more aircraft since you are tripling up your crews.

Beyond that, it isn't even physically possible since the ground turns make it impossible. As an example we can look at just one aspect of turning around a flight, fueling. MD-11's have one of the fastest commercial fuel fill rates for freighters and even with them on-boarding at over 700 gpm they take more than an hour to fill (this also assumes that the fuel trucks can pump at that rate and not nearly all can....many are in the 500 gpm range). So, not including anything else on the ground turn, you already can't keep them in the air 22 hours a day since they will have to come down at some point to fill up.
 
Amazon has also been using Ontrac. In that case you're lucky if your package ends up in the correct city. Forget about on time delivery.
 
Do not underestimate Jeff Bezos, he is a visionary like Steve Jobs, marches to his own drummer and knows no limits.
 
OK, so it turns out my 20 hours/day utilization for freighters was an incorrect sweeping statement based on something I read about an Asia <-> Europe haul that makes a stop in ANC to refuel and change crews. If I could find the article then it would likely show that some carrier set a record for continuous aircraft operation in one 24-hour period, but as Paul mentioned there are logistic reasons why that's not sustainable day after day.

Under closer inspection it turns out that both UPS and FedEx utilize their aircraft for 3-3.5 hours per day, which has been fairly consistent over the years.

Paul_Johnson said:
Passenger aircraft, on the other hand, spend much more time airborne than freighters. Not to mention, with the super twins lots of things now move belly freight so you don't need your dedicated freighters making as many runs most of the year when you can get it done cheaper and faster in an LD3 on DL, KLM, AA, CX, EY, etc.
Click to expand...

The above does support the argument that Amazon leasing their own 767 aircraft doesn't seem like it would be worth doing.
 
Thuleman said:
The above does support the argument that Amazon leasing their own 767 aircraft doesn't seem like it would be worth doing.
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It may still be worth doing because you bulk out before you weigh out and under floor volume in LD3's (or other containers, or even loose loading) is rather limited (particularly domestic). In a dedicated freighter model I have main deck and below deck volumes reducing space constraints. What I don't have in a dedicated freight airline is a flight going where I want it going every hour, which is what I gain with belly freight as I move from commercial airline to commercial airline as needed.

So, for non time sensitive movements that can wait to fill up a freighter or large amounts of bulk packages the dedicated freighter is more useful at times. But, if I run an express/courier company I need lots of flights very close together to get my parcels moved on time.

This is why you see two different philosophies between UPS and FedEx Express. UPS is a trucking company that tries to fly stuff it can't drive and they are essentially a freight company. FedEx Express is an airline that happens to have a very good express/courier/logistics company as its passengers. You can see the difference in their airfleets. FedEx Express has ~650 aircraft of which ~250 are Grand Caravans for getting small amounts of packages or parcels out of very small locals very quickly. UPS on the other hand has a total of about 250 aircraft of which the smallest is 757-200PF. UPS collects things on trucks, move them to large aircraft, move large aircraft to new location, load things on trucks, move them to warehouse, sort, put back on trucks, and deliver. FedEx Express can short cut many of those movements.

Think of it this way, UPS is a hub and spoke network while FedEx Express has a much larger mix of P2P and Hub and spoke. Amazon would be running a hub to hub operation with the way they are describing this potential development. That particular model of hub to hub is great for running dedicated freighters. But can they do it is a different question and I don't work at amazon so I don't know anything about their day to day operations to know if they are going to lose their shirt or not.
 
Paul_Johnson said:
It may still be worth doing because you bulk out before you weigh out and under floor volume in LD3's (or other containers, or even loose loading) is rather limited (particularly domestic). In a dedicated freighter model I have main deck and below deck volumes reducing space constraints. What I don't have in a dedicated freight airline is a flight going where I want it going every hour, which is what I gain with belly freight as I move from commercial airline to commercial airline as needed.

So, for non time sensitive movements that can wait to fill up a freighter or large amounts of bulk packages the dedicated freighter is more useful at times. But, if I run an express/courier company I need lots of flights very close together to get my parcels moved on time.

This is why you see two different philosophies between UPS and FedEx Express. UPS is a trucking company that tries to fly stuff it can't drive and they are essentially a freight company. FedEx Express is an airline that happens to have a very good express/courier/logistics company as its passengers. You can see the difference in their airfleets. FedEx Express has ~650 aircraft of which ~250 are Grand Caravans for getting small amounts of packages or parcels out of very small locals very quickly. UPS on the other hand has a total of about 250 aircraft of which the smallest is 757-200PF. UPS collects things on trucks, move them to large aircraft, move large aircraft to new location, load things on trucks, move them to warehouse, sort, put back on trucks, and deliver. FedEx Express can short cut many of those movements.

Think of it this way, UPS is a hub and spoke network while FedEx Express has a much larger mix of P2P and Hub and spoke. Amazon would be running a hub to hub operation with the way they are describing this potential development. That particular model of hub to hub is great for running dedicated freighters. But can they do it is a different question and I don't work at amazon so I don't know anything about their day to day operations to know if they are going to lose their shirt or not.
Click to expand...

If they pick the right hub cities this might work ... Amazon is a big player in the cloud services market because they can leverage the infrastructure needed for their own business to provide B2B offerings for other customers ... if they pick the right hub cities/locations then they might be able to offer the same model (planes designed to move their own inventory/shipments that share some space with paying 3rd party business customers) ... the success or failure of this venture is all about moving full planes ... also this model could change dramatically if fuel prices increase again
 
Thuleman said:
It's not easy. A trained monkey can lease a 767, but the real challenge comes from ground logistics. You need a massive amount of ground support (and space at airports) to make this viable. Makes me wonder whether they will start to utilize out of the way regional airports with long enough runways but little traffic for this.

Air logistics are all about efficiency and the most successful carriers keep their planes in the air for more than 20 hours per day, some even over 22 hours.

It will be interesting to see whether Amazon can fill their flights to capacity on all legs, that will likely be their biggest challenge.
Click to expand...


They use 3rd party logistics companies for now anyway. That that I would know or anything ;)

The retail space is changing like mad, look at the company that is using farmed out warehousing in cities. Same day delivery will be available in many places over the next 5 years.
 
I just went through a shipping screw up with Amazon, their delivery service http://lasership.com/ claimed they couldn't find my house. They ended up redoing the order and shipping it UPS who delivered in 3 days with no problem.

Jeff Bezos, he is a visionary
Click to expand...

yeah ok :rolleyes:
 
Mr45 said:
I just went through a shipping screw up with Amazon, their delivery service http://lasership.com/ claimed they couldn't find my house. They ended up redoing the order and shipping it UPS who delivered in 3 days with no problem.



yeah ok :rolleyes:
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Jeff Bezos has buttloads of Amazon money that he needs to spend on SOMETHING so he is not taxed like a fiend and gives all that money to the gov't. This is a perfect way to spend all those $$$ on infrastructure which goes under the Capital Expense account and is taxed differently.

I see no problem with Amazon becoming another UPS/FedEx and breaking the hold those companies have on shipping. Good on Amazon as it only benefits the consumer in the end.
 
Would be kinda cool if Amazon had air strips at each of their fulfillment centers, and they just land there :)

Though it would be kinda scary because that's how Secret Badguy hideouts are created.
 
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