Amazon to Lease Cargo Jets for Delivery

In a bid to improve its delivery and logistics operations in the U.S., rumors are circulating of Amazon’s plan to lease 20 cargo jets. The aircraft are chosen to be Boeing 767 freighters. Leasing is, apparently, the only option since they cannot buy the jets as they don’t own an Air Operator Certificate.

Each day, the ecommerce tech giant ships more than 5.2 million packages a day during holidays. Currently, Amazon’s packages are shipped by FedEx, UPS and the U.S. Postal Service. About 70% of their cargo goes through the USPS, 15% through UPS, 10% through FedEx, and the rest through smaller courier companies.

For quite some time, there have been rumors of Amazon starting their own logistics and transportation business to reduce costs and expenses associated with delivery. Due to their massive volume to products shipped each day, it seems logical to have an in-house logistics operation to control deliveries.

There have also been rumors of Amazon already having started their own air freight cargo delivery service since September this year. The operation, known by the codename ‘Aerosmith’, has leased 4 Boeing 767 jets and has flown 4 flights a day out of Wilmington Air Park in Ohio. This is, however, mere speculation.

When asked about the operation, both Amazon and Boeing declined to comment. “We have a longstanding practice of not commenting on rumors and speculation,” Amazon said.

There have also been claims of Amazon operating test cargo flights from the UK to various fulfillment centers across Europe.

Leasing new Boeing 767 jets would cost Amazon a whopping $600,000 each month, with used jets costing around $300,000. Despite the costs associated with the lease, having their own logistics network would be beneficial in three ways: 1) Capacity to do more with less 2) Greater control over delivery 3) Offer their logistics service to other companies, similar to what it’s doing with Amazon Web Services (AWS)

Amazon has been consistently trying to improve delivery times for its customers, spending more than 1 Billion dollars each quarter to create warehouses and shipping hubs in more than 69 cities.

Recently, Amazon invested in thousands of trucks to deliver goods between fulfillment centers and sorting hubs. The Prime Service that offers one hour deliveries, added more than 3 million new members in a week this holiday season, started as a trial in a select few Manhattan zip codes. Now, however, it operates in more than 16 different cities across the United States.

In July of 2015, Amazon Chief Executive Officer Jeff Bezos expressed his concerns to the FAA to assign air space to commercial drones operated by Amazon, benefitting Amazon Prime members by delivering packages in less than 30 minutes as part of Amazon’s Prime Air program.