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Amazon vs carriers – battle for the skies (part one)


Our colleagues over at Tamebay have been reporting on speculation that Amazon is about to launch itself into the airfreight market, signaling trouble for traditional carriers.
One of the stories, which broke in December, originated in the Seattle Times and centred around the belief that Amazon is in talks to lease 20 Boeing 767 cargo jets. Another concerns rumours that the online retail giant has leased a Boeing 737 cargo plane to fly between Germany, Poland and the UK five times a week.

The extent to which any of that is true is impossible to gauge with any certainty. When eDelivery approached Amazon about some of these issues we were reminded that the retailer does not comment on rumour or speculation.

Much of the rationale used to explain these possible developments is based around the idea that Amazon is less than pleased about the service it feels its customers receive from traditional carriers – something that is also used to explain the alleged decision by Amazon to start forcing large retailers to use its logistics operations if they want to continue to operate as Prime retailers.

The importance of the logistics side of retail being able to keep the delivery promises made to the customer cannot be overstated. Yet the ability to keep those promises can often depend on the nature of the promise itself. In the wake of Black Friday 2014, Dick Stead of Yodel called upon retailers not to keep offering unsustainable delivery services – such as next-day – at a time when the delivery network was struggling.

Speaking last year, he said: “We have seen that the majority of retailers are unable to accurately forecast future demand. The carrier industry cannot be expected to take all the risk, investing in building networks that are capable of handling unspecified peaks.

“Working together, we need to find a method of spreading volatile parcel volumes to match the industry capacity, while delivering a high quality service that meets everyone’s requirements. That may mean that 48 and 72 hour services become the standard during peak periods, and where required, next day deliveries are available for a premium.” (More on that here.)

While there are those who believe delivery firms should stop complaining and get on with the business of making delivery work, there are plenty who agree with the Stead viewpoint – retailers have a responsibility to understand capacity issues, they can’t just carry on regardless promising customers next-day delivery while knowing some will be disappointed; shift the goal posts and you can just as easily shoulder some of the responsibility as you can outsource the blame.

Amazon pickerIt’s one thing for a retailer to blithely push delivery responsibility onto carriers, creating a cushion of plausible deniability in the event that things go wrong, but it’s another matter entirely when you are both retailer and the carrier – accusations of broken promises under those circumstances are harder to avoid when there’s no one else carrying the can for you.

So, if Amazon is about to reshape itself as a carrier – or launch a new arm of its business to do so – should the delivery industry be shaking in its boots? If pushed to fall on one side of the line or the other, the answer would probably be no, not yet at least.

As we have said previously, Amazon is always up to something; this is the company that disrupted the book retailing industry, the high street bookstore sector, the publishing sector, and the production of physical books, all before eventually opening a bookstore of its own. Without even taking into account all the other aspects of Amazon’s operations, the extent to which it has never stood still in the book sector alone is a clear indication that this is a business that is always in motion.

In the second part of this feature we’ll consider how Amazon stacks up to the major carriers, we’ll digest some of the numbers relating to air freight, and assess whether we think the investment in time and money is something the retail giant will be willing to commit to in order to transform itself into a carrier that can challenge the likes of DHL, FedEx, and UPS.

Main image: Boeing 747-400F operated by UPS photographed from Clay Lacy Astrovision Learjet, 10 July 2007. Reproduced courtesy of UPS press office image library, for media use only.

Amazon image courtesy of Amazon press office image library, for media use only.

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