[251215.EN.BIZ] Amazon Said To Be Leasing 20 Boeing Jets To Rival Erstwhile Supplier UPS

JUST a few weeks after Amazon purchased thousands of truck trailers to transport goods across the US, announcing "Amazon Prime Air" (drone delivery) and rolling out the "Amazon Flex" delivery system in 10 metro areas this year, the online retail giant appears to be in talks to lease 20 Boeing 767 aircraft for its own air-cargo business.

"It is becoming increasingly clear that Amazon plans to flesh out its own delivery system independent of UPS, and we expect this system to make significant strides in 2016," observed online financial portal, Seeking Alpha.

"UPS will lose Amazon business at some point in time, and we believe that a large portion of this loss will happen in 2016.

"The threat of Amazon becoming a direct competitor with UPS for e-commerce delivery is a possibility considering Amazon's path with AWS (Amazon Web Services)."

The analysts believe that on account of Amazon going head to head with UPS, the traditional package delivery market in the US is prime for disruption sooner than initially expected.

By leasing the jets, the company intends to build own its cargo operation, while reducing its dependency on carriers such as United Parcel Service and FedEx, said the report.

Amazon has reportedly approached several cargo-aircraft lessors, a senior aircraft-leasing company executive with knowledge about Amazon's plan, told the Seattle Times.

The company had also held talks with Air Transport Service Group (ATSG), Atlas Air and Kalitta Air. A source in the cargo industry has said that Amazon intends to kick off its air cargo operation by the end of January 2016.

"I believe they are serious about looking at this. They are not going to hang about," said the leasing executive.

Amazon could also deliver for other companies, and compete with UPS and FedEx, said one analyst. Other retailers could store their products in Amazon warehouses, allowing Amazon to manage delivery and distribution.

This is turn would help Amazon to keep the cargo planes loaded, even after the massive spike in sales once the holiday sales season passes.

Source : HKSG.