Blink And You’ll Miss Amazon Transforming Into a Logistics Company
Overground and underground, Amazon’s transportation metamorphosis is happening fast.
Since 2013, Amazon has slowly but surely been extending its options in freight and delivery. No longer content relying solely on third-party couriers such as UPS to deliver packages to customers, Amazon is turning to its own delivery trucks, drones, ocean freight, and air cargo operations to fulfil deliveries itself; more control, higher profit. Amazon's cloud computing business, Amazon Web Services (AWS), now even offers up physical transportation of massive amounts of data so it can be moved to a data center and uploaded onto AWS. Amazon's global business goes deeper than many people realize.
Amazon's latest logistical solution, revealed in this patent, is the strangest one yet, but hints at Amazon's future of hyperlocal, customer-tailored delivery. The 33-page filing, submitted in 2014 but only granted last November, describes "dedicated network delivery systems" that avoid traffic congestion by going underground. According to the Amazon patent, such a system would "avoid congestion experienced by traditional transportation networks and enable the delivery of objects from an origin to a destination using one or subterranean or above ground elements."
The patent goes on to outline networks of vacuum tubes, conveyor belts, and rails that would carry parcels, carts, and boxes in both vertical and horizontal directions. "A path between the origin and destination may be defined based on any factor, including travel time or cost, and any actual or predicted congestion," says the patent. Illustrations show how the delivery network would link up Amazon's warehouses with locker storage locations, airports, railway stations, and even customer homes.
In the immediate future, however, air cargo is lining up to be one of Amazon's primary avenues of delivery operations. Already boasting a planned fleet of 40 Boeing 767 aircraft, liveried with Prime Air logos, Amazon can start to put a cap on rising shipping costs as well as control its own delivery destiny, avoiding shipping disasters like the one it faced in 2014.
But for now it appears Amazon will get a boost to its current 767 aircraft leasing operations. One of Amazon's two main providers of 767s for Prime Air has purchased an aircraft maintenance business that specializes in the upkeep of the narrow body aircraft. Air Transport Services Group (ATSG) on Tuesday announced its purchase of Pemco World Air Services, with ATSG CEO Joe Hete proclaiming the acquisition "will expand access to maintenance service for customers of ATSG's expanding fleet of Boeing 767 cargo aircraft." That'll be Amazon.
While Pemco doesn't convert 767s (it instead converts Boeing 737s), some suggest that the acquisition moves ATSG closer to one day being able to convert its own 767s, according to Alex Lennane at Loadstar.
The acquisition comes in the same week as Amazon revealed Fulfilment by Amazon (FBA), the retailer's service for selling and shipping products on behalf of other sellers, delivered more than two billion items for sellers in 2016. FBA sellers can store their products in Amazon fulfilment centers, where Amazon picks, packs, ships and provides customers service for sold products. If FBA, Which grew its seller base by 70 percent in 2016, continues its expansion, it will likely become an essential part of Amazon's entire transportation business. For Amazon, big profits line the horizon if transport becomes a larger part of its business model. As for how it affects average folks, the expansion of Amazon's transport business should usher in cheaper, faster, and more reliable deliveries.
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