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June 16, 2024
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A report in the Seattle Times broke the story yesterday that Amazon is looking at acquiring 20 Boeing 767-300ER freighters to avoid problems with unmet deliveries during peak seasons.  Amazon has been experimenting with its own delivery service, which was described by Motherboard here, outlining how an unknown company, rumored to be Amazon, has been testing air freight operations.

The bottom line to this reporting is that it appears Amazon is getting into the package express business, to avoid the difficulties it faced with missed deliveries, refunds of shipping and $20 gift cards to customers that did not receive packages on time.

We know, historically, that Amazon disrupted the bookselling business, and grew to become the go-to and one of the largest on-line retailers in the world.  The results have been devastating to some businesses.  But delivery is a part of the process, and Amazon is looking at innovations.

This video demonstrates how Amazon’s drone delivery service, Amazon Prime Air, will work.

The Bottom Line

Innovation is always disruptive.  If Amazon designs an entirely new delivery channel, with its own air service, its own trucks, and its own drones, where does that leave FedEx and UPS?  There’s a tremendous volume that could be lost to them if Amazon goes independent.   Amazon has a lot of clout because of its sheer mass.

But Amazon doesn’t have a Part 121 certificate, and unless it acquires an airline with one, will need to outsource any flight operations.  Will Amazon create a new-technology distribution company?  In certain markets, it is already offers one hour delivery for items ordered on-line.  While it is not cheap, it provides the “instant fulfillment” some customers want. Combine that innovation with drones, delivery imaging and other innovations, and Amazon could revolutionize the package freight business.

While peak seasons require additional lift, this is not a problem year-round.  What happens during the non-peak season?  Would an Amazon air service seek additional business to offset its fixed costs?  Could Amazon begin to compete with FedEx and UPS?

The implications of this a far reaching.  But with Amazon in negotiations for 20 767-300F aircraft, they are real.  The fall-out will be interesting to watch.

2 thoughts on “How much will Amazon disrupt the package freight business?

  1. Drones? Boeings 767s? New delivery channel? Part 121 certificate?

    This is waaayyyy too complicated.

    Amazon should go for the technological homerun and pour money into inventing a practical teleporter.

  2. I could easily see Amazon contracting with area businesses and/or even private persons (just incorporate after all) in order to have rooftops or backyars to drop packages to so taht people can then pick-up their deliveries. Or these contractors could walk over to their neighbouring houses/businesses to deliver the packages.A type of distributed network where they’d only need a bunch of trucks or larger drones to drop off safely packages. Then the rest (the last mile) could be done by normal folks looking for extra money. That way, no risk of landing on a dog or whatever else. They could make a standard landing area with clear targeting (for the drone cameras/AI) on it where the drones drop the packages. If well designed, you might not even have to land on it, it could be some type of cloth that absorbs the fall and makes the package “roll” into the center and drop into a weatherproof box. Maybe some type of pyramidal structure in the box to force packages to the sides (under the tarp that catches the packages). And the bottom of that box could have a raised floor with holes in it so that the rain that falls through the center/top falls right through to the ground. You could automate the heck out of it. It could be a freestanding box like the clothes donation boxes. Upon falling into the box, the box could be scanned and put into a pickup locked box. Then the recipient gets an email with the package location and unlock code. Recipient then drives to the pickup box, enters their secret code from the email/app and door opens with the package. And voila, no humans required. But you could start with humans doing the local delivery. Amazon could ship a “delivery pod” in a box kit and cover north america with local delivery locations in a couple of months. That way, reduce the chances of blading someone or reduce potential lawyer costs. And, all the while, dropping these fully automated distribution boxes just about everywhere. NYC and other high concentration areas might continue to have specific rules. But for most of the sprawl-land, automated boxes could work very well.

    Planes, couple of trucks to push packages closer to final destination. And army of drones to push from there to drop boxes.

    That’s my idea 😉 Hey, amazon, I’d love to work on that. If you end up using this idea, please DM @PierreBus380 on twitter 😉

    Pierre

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