Amazon now has a foot firmly in the air cargo space as its Prime Air planes take to the sky. The firm has leased 40 jets for its new cargo service, which was ostensibly put in place to help meet the delivery demand over the holiday period.
Records show that its planes are flying almost full, although their loads are light in weight. This is likely in response to the move by FedEx and UPS to start charging customers based on the volume of boxes rather than their weight. By shipping light-yet-big boxes in its own planes, Amazon can bypass those fees.
While there is no question that Amazon’s move is taking business away from FedEx and UPS, a company spokesperson said the cargo service was “needed to supplement that capacity rather than replace it” during the holiday season.
Flights Leaving More Often and Later in the Day
Amazon is focused on drawing in more customers with quick and affordable shipping, particularly as part of its Prime subscription service. The online retailer is now sending out more packages more frequently and later in the day to satisfy its Prime members, who are estimated to number between 35 and 50 million.
Amazon’s planes are flying without stopovers and departing later, with many of its flights leaving unusually late at night from California and Washington. This is believed to be in response to the tendency for people to place orders later in the day when they get home from work.
Amazon’s aircraft are generally averaging somewhere between 37 and 52 percent of their maximum load by weight, while UPS and FedEx are at 56 and 53 percent capacity respectively. It is not yet known just how much Prime Air will affect the bottom line of UPS and FedEx nor how much Amazon is spending on leasing the aircraft, so it is difficult to say if the move has helped them slash costs. Experts predict that Prime Air will expand significantly in the near future.
This blog post was based off of an article from Venture Beat. View the original here.