Proving the Business Case for the Internet of Things

Amazon leases Boeing aircraft to expand delivery network

Steve Rogerson
March 15, 2016
 
E-commerce giant Amazon has signed a deal to lease 20 Boeing 767 freighter aircraft to handle more of its own deliveries in the USA. After leasing five freighters last year for a trial network, reports suggest that these planes will now go into operation on April 1.
 
A report from Research & Markets on the global logistics market predicted growth of 8.44% between 2015 and 2019 and identified the high cost of operation as a major challenge. It highlighted a trend of companies outsourcing some, or all, of their supply management functions such as transportation and warehousing. But Amazon, which currently relies on other companies for delivery services, seem intent on managing its own shipping and distribution services rather than sourcing from competitors.
 
Amazon currently relies on United Parcel Service and FedEx to deliver most of its packages, and spent an estimated $11.5bn on shipping last year. A report on the global airfreight forwarding market identified a trend of carriers charging increased freight rates to forwarders and expected it to have a negative effect on growth.
 
Amazon has been exploring its delivery options by adding truck trailers and freight ships and testing drone deliveries as it looks to challenge the world's biggest logistics companies. The duration of the Boeing leases will be five to seven years.
 
The Research & Markets report expects the domestic freight market in the USA to grow at a CAGR of 4.52% in terms of revenue, and 2.63% in terms of volume between 2015 and 2019. However, the report states that an increase in government regulations has resulted in high operational costs in the USA.