Amazon Leases More Planes For Air Cargo Network

Germany Sends Aid To The Philippines
SCHOENEFELD, GERMANY - NOVEMBER 13: Workers load a shipment of aid from the German Red Cross (DRK) destined for the Philippines on to a Boeing 747 cargo plane at Schoenefeld Airport on November 13, 2013 in Schoenefeld, Germany. The German government is sponsoring the aid, which includes tents, hygiene packages, equipment for producing drinkable water and other necessities, to help alleviate the plight of millions of people made homeless by typhoon Haiyan. (Photo by Sean Gallup/Getty Images)
Photograph by Sean Gallup — Getty Images

Amazon continues to expand its fleet of cargo planes as the e-commerce giant looks to build its own shipping network to transport products and get them to customer homes more quickly.

On Thursday, the Seattle-based corporation announced that it has partnered with cargo airline Atlas Air to lease 20 Boeing planes, which includes use of the planes, crew, and maintenance for seven years.

Dave Clark, Amazon’s senior vice president of worldwide operations, said in a statement, “We are excited to welcome a great provider, Atlas Air, to support package delivery to the rapidly growing number of Prime members who love ultra-fast delivery, great prices and vast selection from Amazon.”

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The deal with Atlas Air follows Amazon’s recent announcement that it would be working with a leasing operator for planes, Transport Services Group (ATSG), to lease 20 planes.

Leasing planes figures into Amazon’s larger plan to manage shipping and distribution services instead of relying on others.

Amazon currently relies on UPS, the U.S. Postal Service, and FedEx to deliver packages to customers’ doorsteps in a matter of days. But with the company’s expected delivery drones, new fleet of trucks, shipping cargo boats, and planes, Amazon is slowly taking over these operations and relying less on the multinational shipping giants, and potentially avoiding delays caused by these companies.

For Amazon, the main benefit of owning the shipping network could be significant for its bottom line amid soaring shipping costs. The company spent over $8.7 billion on shipping in 2014, up from $6.6 billion in 2013. Creating a logistics service could dramatically lower those costs.

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Similar to the way in which Amazon made its cloud computing arm Amazon Web Services into a major line of business, Amazon could also decide to handle shipping for other companies and start competing with the shipping giants like UPS and FedEx.

But Amazon CFO Brian Olsavsky has publicly downplayed the e-commerce giant’s shipping ambitions. During the company’s fourth-quarter earnings call in January, he said that leasing planes and other shipping options isn’t meant to replace existing shipping networks, but merely to enhance them.

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