Moderators: jsumali2, richierich, ua900, PanAm_DC10, hOMSaR

 
User avatar
compensateme
Posts: 3279
Joined: Wed Jan 28, 2009 4:17 am

Rumor: Amazon Starting In-house Airline - Part 1

Fri Nov 06, 2015 12:29 pm

Quoting jetblueguy22 (Reply 40):
Labor costs certainly don't help. But I'd be willing to bet our drivers do more stops in an 8 hour period than anybody else.

No doubt productivity is high or UPS wouldn't be turning a profit. But UPS makes (defined) pension & benefit contributions on an hourly basis in addition to the mid-$30 (it varies slightly around the country) hourly wage drivers earn. In addition, UPS will be paying its hourly employees double time in addition to holiday pay to work Black Friday. Put simply, productivity may be high but it's darn near tough to make money delivering packages when your average hourly rate is in the $60s (including beenies) and the competition is paid per package. Logistics is likely producing the profit at UPS (but as wjcandee implied, without the deliveries (which are probably near break-even) UPS wouldn't have the logistics).
We don’t care what your next flight is.
 
Okcflyer
Posts: 716
Joined: Sat May 23, 2015 11:10 pm

Rumor: Amazon Starting In-house Airline - Part 1

Fri Nov 06, 2015 12:59 pm

Quoting CompensateMe (Reply 50):
ybody else.

No doubt productivity is high or UPS wouldn't be turning a profit. But UPS makes (defined) pension & benefit contributions on an hourly basis in addition to the mid-$30 (it varies slightly around the country) hourly wage drivers earn. In addition, UPS will be paying its hourly employees double time in addition to holiday pay to work Black Friday. Put simply, productivity may be high but it's darn near tough to make money delivering packages when your average hourly rate is in the $60s (including beenies) and the competition is paid per package. Logistics is likely producing the profit at UPS (but as wjcandee implied, without the deliveries (which are probably near break-even) UPS wouldn't have the logistics).

The company I work for, although in a different sector, has a high cost of labor similar to UPS. The cost of labor isn't a problem as long as performance makes it valued. High productivity is one thing (and the UPS guys seem to be quick and efficient), but quality and safety are the keys to success.

Paying a employee $60/hr vs $40/hr doesn't cost much if he doesn't make mistakes. No missed deliveries, no automobile accidents, doesn't hurt himself, no package insurance payouts, and finally is personable and reliable. The last part is critical for reputation and key for avoiding the "race" to the bottom in pricing. The others are keys to minimizing cost of doing business.

In order for that to work, employee performance must be near perfect. UPS doesn't put up with any sub-par performance. Meet their expectations or you're gone. End of story.

The price per package of final delivery, overall, is likely similar the to the other method using a network of outsourced vendors.

[Edited 2015-11-06 05:02:40]

[Edited 2015-11-06 05:04:27]
 
RDUDDJI
Posts: 2242
Joined: Fri Jun 04, 2004 4:42 am

Rumor: Amazon Starting In-house Airline - Part 1

Fri Nov 06, 2015 1:14 pm

Amazon already has fulfillment centers in almost every major metro area in the U.S. I'm not sure how having their own airline would help them... Unless we're talking about a "Drone" airline from the fulfillment centers to your front door. Almost all the stuff at the fulfillment centers is brought in by L2L truck. You couldn't realistically (read: economically) replace that volume with aircraft.

My wife orders stuff from Amazon every day it seems. Almost all of it comes via USPS, and it's almost all from the Chester, VA fulfillment center (for RDU/RIC areas). We use Amazon prime, and even thought they promise 2 day delivery, most product isn't shipped until the next day and they still meet their 2 day obligation because the fulfillment centers are so close.

Occasionally we'll get UPS if it has to come from a different center.

http://www.amazonfulfillmentcareers.com/amazon-fulfillment/locations/
Sometimes we don't realize the good times when we're in them
 
floridaflyboy
Posts: 1608
Joined: Sat Jun 03, 2006 3:26 pm

Rumor: Amazon Starting In-house Airline - Part 1

Fri Nov 06, 2015 1:23 pm

Quoting flyDTW1992 (Reply 2):
If Amazon thinks they can run a better overnight/express package network than FedEx, they're fooling themselves pretty badly. ESPECIALLY with ABX Air at the helm--Yikes.

That's a very very uninformed statement. ABX spent most of its existence hauling express/overnight packages by air in addition to running the package sort in ILN and they did both exceptionally well. In addition, they won contracts to operate USPS sorts in several locations, including IND based on that high level of performance. They have the infrastructure in place up in ILN (which happens to also have their corporate HQ and primary MX base on site). If Amazon wants this to happen, ABX will make it happen.

Quoting wjcandee (Reply 15):
Also, as to ABX Air, Airborne was a great, great company for business delivery, which was it's primary business. Their ability to do certain missions was legendary. At one point, they were responsible for delivering basically every film print to movie theatres around the country, and they had that business because they were the only ones the film industry trusted to do it right every time. They did the initial iPhone rollout flawlessly. Residential wasn't their thing, so most people whose interaction with the logistics business is getting a new disk drive delivered from Newegg.com to their Mommy's house isn't really in a position to comment on them. DHL ruined their operation, plain and simple, through arrogance and stupidity, in my view. They were the first to do affordable residential delivery in a partnership with the USPS, by years, and were mocked by some for it. Of course now every big player has a significant business doing just that.

  
Good goes around!
 
wjcandee
Posts: 9736
Joined: Mon Jun 05, 2000 12:50 am

Rumor: Amazon Starting In-house Airline - Part 1

Fri Nov 06, 2015 1:56 pm

Quoting jetblueguy22 (Reply 49):
I don't know how FedEx does it, but I know our SurePost gets delivered in bags and is tendered directly to the post office like a delivery. We don't put it on a trailer and let them unload it at their leisure. When it's tendered to the post office it is sitting there.

Yeah, the model is different. Smartpost has an entire infrastructure just for that business. If there is a local Smartpost terminal near the parcel's origin, it is picked up and originates at the nearby Smartpost terminal, where it boards a Smartpost line haul directly to a destination Smartpost terminal. If there is no proximate Smartpost terminal at the origin, it originates at a Ground station, and travels by a Ground line haul to the Ground terminal nearest the destination Smartpost terminal. So in my case, if it travels by the Ground network, it goes to Keasby, NJ in the same truck with the stuff that will delivered the next morning by Ground or Home Delivery's last-mile network. Tha Smartpost parcel is unloaded at Keasby and set aside, then spends up to 24 hours sitting until it trucked over to Edison, which is the destination Smartpost terminal. It then sits there before being processed with the rest of that day's business that arrived by the Smartpost line hauls. It is then "dispatched" via the Smartpost local contractor network to the DDU.

Surepost sends the package by ground to the local UPS station, and always preserves the ability of UPS to deliver the package itself if that would be more efficient. In fact, most of my Surepost packages actually arrive on the brown truck, because I live in a 450-unit apartment building whose package room receives 50 or more UPS packages a day. UPS is coming here anyway, so the Surepost product just gets loaded on the same truck. In the few cases where it doesn't come on the brown truck, it takes an extra day, because it seems usually to be dropped at the DDU during normal business hours, and then gets delivered the next morning.

UPS-MI is more-similar to Smartpost, and suffers from a similar lag in delivery during transfer to the USPS. But it is marketed as an economy product with longer delivery times than UPS Ground or UPS Surepost (in those cases where the item can travel by MI, which is more restrictive than UPS). Efficiency is at the core of the MI service, and producing efficiency means aggregating items. The consumer isn't entitled to have an employee drive their parcel directly to the local DDU within seconds of it arriving in town, because that's not what the shipper paid for. If the consmer wants faster service, he/she has to pay the higher price of UPS Ground.
 
LU9092
Posts: 145
Joined: Thu Oct 18, 2007 2:09 am

Rumor: Amazon Starting In-house Airline - Part 1

Fri Nov 06, 2015 2:14 pm

Quoting B747400ERF (Reply 41):
Why do certain people treat economics like a religion? As if innovation only started with the idea of capitalism.

It's the story - the mythos - of the United States of America that everyone who is born here is indoctrinated with. Every culture has their own, including yours. This is very similar to religion, though there's a bit more provable truth behind the national myths. Innovation didn't start with capitalism, but it certainly exploded. Of course, environmental destruction, population, and much else exploded too.
 
PITrules
Topic Author
Posts: 2109
Joined: Fri Jun 23, 2000 11:27 am

Rumor: Amazon Starting In-house Airline - Part 1

Fri Nov 06, 2015 11:17 pm

"‘Amazon Transportation & Logistics’ [hypothetical division] could earn the e-commerce giant $5bn a year"
http://theloadstar.co.uk/amazon-tran...n-the-e-commerce-giant-5bn-a-year/
FLYi
 
flyDTW1992
Posts: 1059
Joined: Sun Jan 11, 2015 1:04 am

Rumor: Amazon Starting In-house Airline - Part 1

Fri Nov 06, 2015 11:51 pm

Quoting floridaflyboy (Reply 53):
That's a very very uninformed statement
Quoting floridaflyboy (Reply 53):
If Amazon wants this to happen, ABX will make it happen.

I'm aware of what ABX once was. But today they're a shell of that former glory.

Last I heard they don't have the manpower to be adding much new business, and their fleet of tired 767s is just getting by in DHL service.

But hey, I work for a (sort of) competitor, so I may be hearing all this from unreliable secondhand sources.

Still, I standby my basic opinion that if Amazon wants to build a top-notch, highly specialized air freight network of their very own, I don't really think the ABX of today is the company they want taking point. I'll gladly be proven wrong though, if in fact Amazon moves forward with such a project.
Now you're flying smart
 
threeifbyair
Posts: 939
Joined: Tue Aug 21, 2007 1:44 pm

Rumor: Amazon Starting In-house Airline - Part 1

Sat Nov 07, 2015 12:07 am

Quoting jetblueguy22 (Reply 40):
I'm sure there is still a need to move products between distribution centers, but even still, I can't imagine it's that much. If one center is out of a product they can still ship it from another. Most of my shipments seem to come from California and Arizona, while there is a distribution center only a few hours away in Minnesota.

Also would not surprise me if Amazon is consolidating deliveries itself, which may be the point of this air freight operation. Consolidating 2+ items into a single shipment saves on last mile costs, which is by far the most expensive part of the fulfillment process.

Let’s say you order two items – one is stored locally, the other isn’t. Instead of shipping two items FC1-customer and FC2-customer, Amazon could send item 1 to FC2, pack it with item 2, and deliver both items in a single package. You’d need a robust air network that hit the major FC locations, but that isn’t too difficult. Most products aren’t stored in a single FC.
 
User avatar
lightsaber
Moderator
Posts: 20945
Joined: Wed Jan 19, 2005 10:55 pm

Rumor: Amazon Starting In-house Airline - Part 1

Sat Nov 07, 2015 2:19 am

Why the discussion on how Amazon will get from the airport to homes? I live in a Amazon Fresh" delivery neighborhood. Amazon already has trucks. They contract and it would surprise me if they didn't Uber.

I've received Amazon packages from USPS, FedEx, UPS, Amazon Fresh, white vans, and random cars dropping off packages.

If they can fly in packages, they'll find a way.

Quoting threeifbyair (Reply 36):

Amazon is not friendly with vendors at all. Combine that with their huge shipping expenses and Amazon sees an opportunity to cut costs.

Amazon has several major cost cutting endeavors in work. A major effort is shipping.

Quoting threeifbyair (Reply 58):

Amazon has issues with being too spread out between FCs. This could be a partial solution. The robots help.  

Lightsaber
I cannot wait to get vaccinated to live again! Warning: I simulated that it takes 50%+ vaccinated to protect the vaccinated and 75%+ vaccinated to protect the vac-hesitant.
 
User avatar
william
Posts: 3359
Joined: Thu Jun 10, 1999 1:31 pm

Rumor: Amazon Starting In-house Airline - Part 1

Sat Nov 07, 2015 2:30 am

Because of Amazon the rest of us customers have dim weight on our ground packages. Thank you for using oversized boxes Amazon.
 
jetblueguy22
Posts: 3505
Joined: Thu Nov 29, 2007 12:26 am

Rumor: Amazon Starting In-house Airline - Part 1

Sat Nov 07, 2015 4:50 am

Quoting william (Reply 60):
Because of Amazon the rest of us customers have dim weight on our ground packages. Thank you for using oversized boxes Amazon.

I'd be willing to bet they don't pay the dim weight fees. They still use boxes that are too big.
Pat
Look at sweatpants guy. This is a 90 million dollar aircraft, not a Tallahassee strip club
 
floridaflyboy
Posts: 1608
Joined: Sat Jun 03, 2006 3:26 pm

Rumor: Amazon Starting In-house Airline - Part 1

Sat Nov 07, 2015 4:56 pm

Quoting flyDTW1992 (Reply 57):
I'm aware of what ABX once was. But today they're a shell of that former glory.

Last I heard they don't have the manpower to be adding much new business, and their fleet of tired 767s is just getting by in DHL service.

But hey, I work for a (sort of) competitor, so I may be hearing all this from unreliable secondhand sources.

Still, I standby my basic opinion that if Amazon wants to build a top-notch, highly specialized air freight network of their very own, I don't really think the ABX of today is the company they want taking point. I'll gladly be proven wrong though, if in fact Amazon moves forward with such a project.

Yes, your sources are very unreliable. The 767 fleet has been an extremely reliable operation. Their maintenance organization still has a very strong reputation and keeps the fleet going strong. They even insource a significant amount of MX for other carriers. They continue to add frames back from their low point after DHL slashed the US market and have greatly expanded their non-DHL business portfolio with a tremendous ACMI/Ad-hoc charter operation in central/South America. In addition, they have frequently provided lift in Asia for both JAL and ANA. We're talking a very very adaptable company.

Just because the business model has changed doesn't mean that the airline is incapable of running what they were built on. And the numbers speak for themselves.
Good goes around!
 
DiamondFlyer
Posts: 3437
Joined: Wed Oct 29, 2008 11:50 pm

Rumor: Amazon Starting In-house Airline - Part 1

Sat Nov 07, 2015 5:02 pm

Quoting flyDTW1992 (Reply 57):
Last I heard they don't have the manpower to be adding much new business, and their fleet of tired 767s is just getting by in DHL service.

Of course you think that, if you believe everything that comes out of Connie's mouth, or the people that work for him, you deserve to be in the dark. Everyone one of the carriers based at YIP is that way, they think they know everything, but really don't know jack all (I worked until very recently for a YIP based carrier)

Go down to ILN, look around what the operation ATSG is running there. I've been there, it's a great facility. Between ABX and ATI, I have no doubt that ATSG would love to tell DHL to pound sand and fly for someone else.

-DiamondFlyer
From my cold, dead hands
 
User avatar
Spacepope
Posts: 4917
Joined: Tue Dec 28, 1999 11:10 am

Rumor: Amazon Starting In-house Airline - Part 1

Sat Nov 07, 2015 6:15 pm

Quoting william (Reply 60):

Because of Amazon the rest of us customers have dim weight on our ground packages. Thank you for using oversized boxes Amazon.

They've been charging dim weight on ground packages long before Amazon.
The last of the famous international playboys
 
jetblueguy22
Posts: 3505
Joined: Thu Nov 29, 2007 12:26 am

Rumor: Amazon Starting In-house Airline - Part 1

Sat Nov 07, 2015 7:33 pm

Quoting Spacepope (Reply 65):
They've been charging dim weight on ground packages long before Amazon.

Not on ground.
Pat
Look at sweatpants guy. This is a 90 million dollar aircraft, not a Tallahassee strip club
 
wjcandee
Posts: 9736
Joined: Mon Jun 05, 2000 12:50 am

Rumor: Amazon Starting In-house Airline - Part 1

Sat Nov 07, 2015 11:20 pm

Quoting floridaflyboy (Reply 62):
In addition, they have frequently provided lift in Asia for both JAL and ANA.

Exactly, These guys are IMPOSSIBLE to satisfy, and yet they stick with ATSG (ABX, mostly). Remember, both of those carriers operate in a culture where the clocks on the subways and trains show what SECOND it is, and trains are expected to depart on the SECOND. A minute delay, and there will be lots of apologizing. And yet they keep coming back to ABX. I think that says something.

DHL hated hated hated Joe Hete and his people, because they told DHL over and over not to do this and instead to do that, and the DHL execs just plowed ahead in their own stupid way and managed to lose billions and billions of the parent company's money, in large part because they lost customers. They could have been successful if they had listened, but they didn't and they weren't. One example, changing the destination codes on the same weekend that they brought all the business to ILN. That was insane, and yet they insisted on doing it. The chaos this created took literally six months to unravel.

Once DHL Corporate pulled the plug on the US domestic operation, DHL immediately embarked upon trying to find other people to operate their aircraft, after pulling their now-tiny operation back to their tiny hub at CVG. But they couldn't beat ABX for their reliability and price, so they kept using them to some extent, squeezing and screwing them at every available opportunity.

Meanwhile, rather than just give up, Hete and his guys chased every business opportunity they could find with amazing zeal, consistent with their longstanding culture to squeeze every drop they could out of every nickel. (And this didn't mean cutting corners, it meant finding smart, repeatable ways to do things that saved time and money. One example was doing the W&B actually on the aircraft as the cans were being loaded. The information would be put into a little inexpensive computer (a programmable calculator, I think) at the door as each can came aboard. As soon as the cans were loaded, voila!, W&B. AStar used a more traditional system involving information being radioed to and from a dispatcher. Load a can out of the predicted order, and it's delay time. Just stuff like that. ABX had a reputation for listenening to its employees, and procedures like that were a good example of great ideas filtering up from the floor.

Anyway, through pure determination, the company lived. Now it is expanding in a tough market. More power to them.

PS My prediction is that DL is going to be very, very happy with the work AMES does for them on the 717s, and this may be an opportunity to take on more business for a great customer.

[Edited 2015-11-07 15:32:57]
 
wjcandee
Posts: 9736
Joined: Mon Jun 05, 2000 12:50 am

Rumor: Amazon Starting In-house Airline - Part 1

Sun Nov 08, 2015 7:03 am

Some idiot over at Airline Pilot Central spilled the beans the moment the contract started, and offered to share more details as he learned them. Nice way to get your company disqualified from future business, as most big businesses are serious as a heart attack about NDAs. Fortunately, a bunch of other idiots who post there mocked him and attacked Bezos as stupid for taking on a business he knew nothing about, and said it would never happen, and the thread seems to have died. Looks like the first guy has now decided that he wants to keep his job and has shut up for the time being.

It's remarkable how people say things like, "Too much capital investment required to do something like this," and "It would be crazy to run your own airline," and "Amazon would have to set up a whole network," etc.

Seems to me that Amazon is doing an amazing job running its own ground network to get stuff to the USPS from its warehouses, with a level of speed and reliability that vastly exceeds what Smartpost, Surepost, Global Mail (Ecommerce services) and Newgistics have been able to accomplish, after setting it up about a year ago. I don't see what the big deal is about adding some privately-contracted air lift to that mix, even if it is just to balance inventory among distribution centers on the fly. Nobody says they are flying packages. They could be flying pallets of material needed to fill two-day orders locally. Amazon is a very sophisticated operation, and they might be doing something truly-revolutionary, in the same way that they developed revolutionary alogrythms for their back-end computer systems. Right now, they have their own contracted ground network as part of their shipping options mix, a contracted last-mile-only delivery system (USPS) as part of their mix, and their own presorting operation. They provide turnkey warehousing, delivery, credit card processing, website management, cloud services and many more things quietly to some of the US's largest corporations. Dedicated contract air might be a nice addition to their logistics business.

And if they want to expand, there's a nice dormant state-of-the-art sorting system and a hungry local workforce available at a private airport in the Midwest. Discounting what they might do is just whistling past the graveyard.

There's nothing wrong with trying out an idea, and if it doesn't work, there really is very little harm to Amazon.
 
wjcandee
Posts: 9736
Joined: Mon Jun 05, 2000 12:50 am

Rumor: Amazon Starting In-house Airline - Part 1

Sun Nov 08, 2015 7:16 am

Quoting floridaflyboy (Reply 62):
They even insource a significant amount of MX for other carriers

Including, very recently, a 3-year multiline maintenance operation for DL's almost-100 717s, and as-yet-undisclosed other DL aircraft (767s, anyone?).

That could only happen after a thorough soup-to-nuts evaluation of their capabilities and quality by DL, who doesn't enter into 3 and 5 year agreements lightly (the overall agreement is 5 years).

[Edited 2015-11-07 23:19:17]
 
RamblinMan
Posts: 1027
Joined: Sat Oct 09, 2010 3:57 pm

Rumor: Amazon Starting In-house Airline - Part 1

Sun Nov 08, 2015 11:00 am

Quoting threeifbyair (Reply 58):
Let’s say you order two items – one is stored locally, the other isn’t. Instead of shipping two items FC1-customer and FC2-customer, Amazon could send item 1 to FC2, pack it with item 2, and deliver both items in a single package.

Trust me, this already happens on an enormous scale. There are fulfillment centers in the network which receive nothing but transshipments from other FCs. I could see Amazon starting its own truck line to handle this freight but an airline...I'll believe it when I see it.
 
aryonoco
Posts: 681
Joined: Fri May 11, 2012 1:51 am

Rumor: Amazon Starting In-house Airline - Part 1

Sun Nov 08, 2015 12:45 pm

Quoting wjcandee (Reply 67):
It's remarkable how people say things like, "Too much capital investment required to do something like this," and "It would be crazy to run your own airline," and "Amazon would have to set up a whole network," etc.

IBM and HP said the same thing when Amazon started in cloud business (or renting servers as it was called back then). Oh it's too capital expensive, oh it requires too much technical knowledge and expertise that Amazon doesn't have. Look where AWS is now and where IBM and HP's efforts have gone.

Amazon is not infallible. the Fire Phone was a massive multi-billion dollar failure. But Amazon succeeds a lot more than it fails.

And if anyone thinks Bezos is afraid of entering new industries, may I point out that the man bought Washington Post out of his own personal money, and no one quite knows why!
 
C010T3
Posts: 1956
Joined: Wed Jul 19, 2006 5:48 am

Rumor: Amazon Starting In-house Airline - Part 1

Sun Nov 08, 2015 2:31 pm

Why don't they start a JV with DHL? Maybe Amazon's business is what is missing for DHL to be interested in rebuilding its US network.
 
HPRamper
Posts: 5113
Joined: Sat May 14, 2005 4:22 am

Rumor: Amazon Starting In-house Airline - Part 1

Sun Nov 08, 2015 3:27 pm

Quoting C010T3 (Reply 71):
Why don't they start a JV with DHL? Maybe Amazon's business is what is missing for DHL to be interested in rebuilding its US network.

Amazon freight is extremely low-yielding. It's great to fill in the gaps but if your business model is based on carrying primarily Amazon, you'll be struggling to break even.
 
RDUDDJI
Posts: 2242
Joined: Fri Jun 04, 2004 4:42 am

Rumor: Amazon Starting In-house Airline - Part 1

Sun Nov 08, 2015 5:44 pm

Quoting wjcandee (Reply 67):

There's nothing wrong with trying out an idea, and if it doesn't work, there really is very little harm to Amazon.

If you don't include the millions/billions of $ lost. Amazon is marginally profitable at best (and not even that in many quarters).

I'm not saying it wouldn't/won't work, but to say there's "little harm" if it fails isn't accurate.
Sometimes we don't realize the good times when we're in them
 
User avatar
spinkid
Posts: 1900
Joined: Fri Jul 20, 2001 5:59 am

Rumor: Amazon Starting In-house Airline - Part 1

Sun Nov 08, 2015 6:35 pm

Quoting aryonoco (Reply 70):

Quoting wjcandee (Reply 67):
It's remarkable how people say things like, "Too much capital investment required to do something like this," and "It would be crazy to run your own airline," and "Amazon would have to set up a whole network," etc.

IBM and HP said the same thing when Amazon started in cloud business (or renting servers as it was called back then). Oh it's too capital expensive, oh it requires too much technical knowledge and expertise that Amazon doesn't have. Look where AWS is now and where IBM and HP's efforts have gone.

They are also producing their own television content, something else people thought they couldn't pull off.

I suspect they can save money getting the products directly to distribution centers, but door to door delivery will be much harder to pull off, but who knows maybe in 15 years, that is what we'll see happening.
 
wjcandee
Posts: 9736
Joined: Mon Jun 05, 2000 12:50 am

Rumor: Amazon Starting In-house Airline - Part 1

Sun Nov 08, 2015 6:48 pm

Quoting C010T3 (Reply 71):
Why don't they start a JV with DHL?

Because the Germans running DHL already screwed up Airborne once because they don't understand the US and don't deserve a chance to do it again?

They don't need DHL's last-mile or distribution centers. All they need is the lift, and they are looking at a good carrier to provide it.
 
wjcandee
Posts: 9736
Joined: Mon Jun 05, 2000 12:50 am

Rumor: Amazon Starting In-house Airline - Part 1

Sun Nov 08, 2015 7:13 pm

Quoting RDUDDJI (Reply 73):
I'm not saying it wouldn't/won't work, but to say there's "little harm" if it fails isn't accurate.

You guys don't get what they are doing. They already spend hundreds of millions on delivery every year. To optimize costs, they have examined whether doing some of the work themselves can save money and improve reliability. Instead of saying, "Come get our shipments and take them to the customers", they have broken "delivery" into its component parts. Among others, these are pickup, sort, line-haul, sort, last-mile. They have then decided to move a portion of the overall delivery requirement by a system that includes components that they have brought in-house.

Sometimes, I get a ground package from Amazon that FedEx Ground has picked up at Amazon and brought to me through its Home Delivery service. Sometimes, I get something from Amazon that UPS has picked up somewhere (usually far) and has delivered by Next Day Air. Etc. But mostly these days, I get my Amazon deliveries by a different method (which come to me every few days because it's a big money-saver (and convenience-generator) here in Manhattan to buy essentials from Amazon and from Walmart.com). These days, a package is usually picked up from the warehouse (one of several in the Northeast) by Amazon contract line-haul, taken to Avenel, NJ, where it is aggregated for the USPS with other parcels coming to the NY and Long Island areas, among others, and then taken from Avenel by Amazon contract delivery to the individual post offices (DDUs) on Long Island and to USPS ADCs (Area Distribution Centers) in Manhattan. (So my parcel for 10021 actually gets injected by Amazon at the bigger facility at 10022 and brought by USPS from there to the carriers on my Zip.) This Amazon-run service gets me a parcel from the Delaware warehouse to my door overnight in most cases, by eliminating the delays inherent at the various stages when it's done by Smartpost or Newgistics, at essentially the same operating cost as those guys have.

Seems to me that all they would do with an air component, is supplement that operation. Instead of handing a parcel to FedEx at ONT, for example, to deliver to 10021, they could use their own air to move it to ABE or Avenel, and put it into their own pre-existing network using USPS for the last mile. Is it cheaper to do it that way themselves? Only actually trying it will tell.

Or, they could use the air to balance warehouse inventory levels, air shipping say 20 Transformer toys to ABE for boxing there and delivery through their existing ground network. That would save the weight of the delivery packaging. More likely, it would be speedier to delivery-package the stuff at the origin (as Apple often does with the iPhone in China), but the options are endless and what works best can be determined by the people who know best. (You guys knew that about the iPhone you pre-ordered, right? It is delivery-packaged and labelled with your address in China, put on a pallet and air-shipped to the nearest carrier delivery center in the US, where it is broken down and injected to the carrier's delivery network with no intermediate warehouse stop for processing in the US.)

In short, I don't think this is going to be as significant an expense as people think, and it is supplanting an alternative expense, so what's the big deal?
 
wjcandee
Posts: 9736
Joined: Mon Jun 05, 2000 12:50 am

Rumor: Amazon Starting In-house Airline - Part 1

Sun Nov 08, 2015 7:26 pm

Quoting spinkid (Reply 74):
but door to door delivery will be much harder to pull off

They are doing door-to-door with stuff like Amazon Fresh in big metro areas, and using that same delivery team to deliver a limited supply of other stuff.

However, I think the main last-mile delivery component of their in-house network will be through the USPS, unless and until Amazon's competitors (and their unions) can persuade their elected representatives to screw with the USPS to destroy Amazon's ability to use it. The USPS needs the business and has a disciplined, union workforce that can get the job done. We all have USPS horror stories, but any organization with 500,000 employees is going to have some kinks in some places. Fact is, they do a good job, and outside of the big metro areas, the local post office employees are neighbors and friends. Back when I had some business in Snellville, Georgia, I found that this modern suburb still had a small-town feel at the post office. Regular folks and many small businesses didn't use FedEx and UPS like they do here in NYC, they took basically all their stuff to the Post Office, where super-friendly, competent people that they had known for years took care of them. Same thing for me on Long Island, suprisingly; our mail carrier out there has been our pal for years, knows where our house is because he goes there every day (unlike some other delivery drivers), happily carries packages INSIDE if my older parent asks him to, and is beloved. Kind of like the UPS Man is at most businesses (and in "Legally Blonde", for example, reflecting that it's this way all over). And when I sent a parcel to Japan from the local post office, I was surprised to see that the window clerk filled out all the paperwork, recommended options, and slapped the various stickers, paperwork, etc., on it like she did it every day. (Maybe she does.)
 
wjcandee
Posts: 9736
Joined: Mon Jun 05, 2000 12:50 am

Rumor: Amazon Starting In-house Airline - Part 1

Sun Nov 08, 2015 7:29 pm

Quoting RamblinMan (Reply 69):
I could see Amazon starting its own truck line to handle this freight but an airline...I'll believe it when I see it.

I don't think they want the hassle of doing either one. Trucking is done by contract carriers, small and large. Why wouldn't they do the airline stuff the same way?
 
RDUDDJI
Posts: 2242
Joined: Fri Jun 04, 2004 4:42 am

Rumor: Amazon Starting In-house Airline - Part 1

Sun Nov 08, 2015 11:53 pm

Quoting PITrules (Thread starter):
ABE and ONT are major Amazon fulfilment centers.

There are also major distribution hubs for hundreds of other companies serving the two largest metros in the U.S... If you ever drive through ABE, it's all distribution centers for the NYC/PHL areas. ONT serves the same for SoCal.

Quoting wjcandee (Reply 76):
You guys don't get what they are doing.

No one "gets" what they're doing, because we have absolutely no idea what they're doing. Just a ton of conjecture based off a "rumor" in a post that isn't even linked.

The rest was TL;DR.
Sometimes we don't realize the good times when we're in them
 
wjcandee
Posts: 9736
Joined: Mon Jun 05, 2000 12:50 am

Rumor: Amazon Starting In-house Airline - Part 1

Mon Nov 09, 2015 1:11 am

Quoting RDUDDJI (Reply 79):
No one "gets" what they're doing, because we have absolutely no idea what they're doing.

Oy.
 
wjcandee
Posts: 9736
Joined: Mon Jun 05, 2000 12:50 am

Rumor: Amazon Starting In-house Airline - Part 1

Thu Nov 12, 2015 5:21 pm

Replacing my previous post....

A little sleuthing turned up a few more flights in the network that don't go through ILN.

There is an ABE-OAK daily turn on ATN. ABX has taken over the ABE-ILN turn from ATN.

And there is a ILN-DFW-PHX-DFW-ILN turn, also on ATN. The DFW-ILN is new, and I picked up that tag from DFW-PHX and back. The flight numbers suggest that both flights are for the same customer.

Do these locations make sense given the location of major Amazon distribution centers? Or do they suggest another customer?

Looks like today's OAK-ABE diverted to SLC. I don't see where/how it was recovered. That's going to be one of the issues of running one's own network...how to plan for recovery when/if there are issues.

[Edited 2015-11-12 09:54:01]

[Edited 2015-11-12 10:15:43]
 
HPRamper
Posts: 5113
Joined: Sat May 14, 2005 4:22 am

Rumor: Amazon Starting In-house Airline - Part 1

Thu Nov 12, 2015 6:05 pm

Quoting wjcandee (Reply 81):
And there is a ILN-DFW-PHX-DFW-ILN turn, also on ATN. The DFW-ILN is new, and I picked up that tag from DFW-PHX and back. The flight numbers suggest that both flights are for the same customer.

Do these locations make sense given the location of major Amazon distribution centers? Or do they suggest another customer?

I don't know about DFW, but Phoenix has a massive Amazon distribution center. One of the largest west of the Mississippi River.
 
User avatar
dabpit
Posts: 849
Joined: Tue May 01, 2012 10:19 am

Rumor: Amazon Starting In-house Airline - Part 1

Thu Nov 12, 2015 6:30 pm

Quoting aryonoco (Reply 70):
nd if anyone thinks Bezos is afraid of entering new industries, may I point out that the man bought Washington Post out of his own personal money, and no one quite knows why!

He also owns a space company called Blue Origin.

http://time.com/3841589/blue-origin-space-jeff-bezos-amazon/
Carpe Diem
 
threeifbyair
Posts: 939
Joined: Tue Aug 21, 2007 1:44 pm

Rumor: Amazon Starting In-house Airline - Part 1

Thu Nov 12, 2015 9:45 pm

Quoting HPRamper (Reply 82):
I don't know about DFW, but Phoenix has a massive Amazon distribution center. One of the largest west of the Mississippi River.

Yes. 4 facilities in greater DFW. Not all of those ship smaller items, though - probably at least one is focused on big items that aren't going to go air most of the time.

Also, more than one facility in greater PHX I believe.
 
User avatar
KaiGywer
Posts: 11183
Joined: Sun Oct 26, 2003 9:59 am

Rumor: Amazon Starting In-house Airline - Part 1

Thu Nov 12, 2015 11:14 pm

Quoting william (Reply 60):
Because of Amazon the rest of us customers have dim weight on our ground packages. Thank you for using oversized boxes Amazon.
Quoting jetblueguy22 (Reply 61):
I'd be willing to bet they don't pay the dim weight fees. They still use boxes that are too big.

I've actually found that the majority of my (many) Amazon packages come in a properly sized box or padded envelope. I use Prime, so get everything 2-day and it's normally shipped UPS all the way to my door.

Although I laughed last year (I'm sure the UPS guy didn't) when I got a 2-day package containing a Dyson vacuum which I had marked to giftwrap. Hence the already big vacuum box came packaged inside another even bigger box.... I tried, and I fit inside that box  
“Once you have tasted flight, you will forever walk the earth with your eyes turned skyward, for there you have been, an
 
wjcandee
Posts: 9736
Joined: Mon Jun 05, 2000 12:50 am

Rumor: Amazon Starting In-house Airline - Part 1

Fri Nov 13, 2015 12:01 am

Kai,
Completely agree. They use the right size box at Amazon 99% of the time. Walmart, however, really seems to use very little care in assembling their packages from certain distribution centers. From others, it's perfect. But you can tell based on where its coming from whether it's going to be a vastly oversized box. Interestingly enough, in Manhattan and also on Long Island, almost every one of my prime 2-day packages get delivered by the mailman. It comes from any number of nearby distribution centers, goes to Avenel, New Jersey by Amazon in-house ground network, and then gets transferred to my post office. Some of my one day packages come the same way. They really seem to have it down with the USPS here.
 
User avatar
seabosdca
Posts: 6607
Joined: Sat Sep 01, 2007 8:33 am

Rumor: Amazon Starting In-house Airline - Part 1

Fri Nov 13, 2015 12:18 am

This thread is fascinating. A lot of expertise here.

Amazon is certainly willing to experiment, and some of the experiments are more successful than others from a customer service perspective. The USPS deliveries rock. They are always on time, frequently available on Sunday, and I've never had a package damaged. On the other hand... there is Ontrac.   Packages show up at 9 p.m., thrown at the door by a creepy guy in an unmarked and usually damaged white van who proceeds to peel out and speed down our residential streets.
 
DiamondFlyer
Posts: 3437
Joined: Wed Oct 29, 2008 11:50 pm

Rumor: Amazon Starting In-house Airline - Part 1

Fri Nov 13, 2015 12:32 am

On top of this flying, I know that they were using a large 135 carrier for some trial runs this past spring/summer for a flight from the DFW to SoCal and back.

-DiamondFlyer
From my cold, dead hands
 
jetblueguy22
Posts: 3505
Joined: Thu Nov 29, 2007 12:26 am

Rumor: Amazon Starting In-house Airline - Part 1

Fri Nov 13, 2015 4:02 am

Quoting threeifbyair (Reply 84):
Also, more than one facility in greater PHX I believe.

I believe there are 2 facilities in PHX.

Quoting KaiGywer (Reply 85):
I've actually found that the majority of my (many) Amazon packages come in a properly sized box or padded envelope. I use Prime, so get everything 2-day and it's normally shipped UPS all the way to my door.

Although I laughed last year (I'm sure the UPS guy didn't) when I got a 2-day package containing a Dyson vacuum which I had marked to giftwrap. Hence the already big vacuum box came packaged inside another even bigger box.... I tried, and I fit inside that box  
Quoting wjcandee (Reply 86):
Completely agree. They use the right size box at Amazon 99% of the time.

I will admit that they have gotten better. But there are still a lot of packages that are in boxes way too big. I see many on a daily basis. It causes a lot of damages with their shipments.

Quoting seabosdca (Reply 87):
On the other hand... there is Ontrac.   Packages show up at 9 p.m., thrown at the door by a creepy guy in an unmarked and usually damaged white van who proceeds to peel out and speed down our residential streets.

There have been a lot of complaints about Ontrac and Lasership. The drivers can be a little sketchy at best. You don't have the trust UPS, FedEx, and the USPS have built up over many years.
Pat
Look at sweatpants guy. This is a 90 million dollar aircraft, not a Tallahassee strip club
 
User avatar
Spacepope
Posts: 4917
Joined: Tue Dec 28, 1999 11:10 am

Rumor: Amazon Starting In-house Airline - Part 1

Mon Nov 16, 2015 7:54 pm

Quoting wjcandee (Reply 81):
The DFW-ILN is new, and I picked up that tag from DFW-PHX and back.

It looks like the DFW-PHX run is ATN 3007. Looks like ATN or ABX, they are keeping the 3xxx flight numbers.
The last of the famous international playboys
 
wjcandee
Posts: 9736
Joined: Mon Jun 05, 2000 12:50 am

Rumor: Amazon Starting In-house Airline - Part 1

Mon Nov 16, 2015 8:04 pm

Quoting Spacepope (Reply 90):
Looks like ATN or ABX, they are keeping the 3xxx flight numbers

Yep. The basic plan seems to have been ATN flights as 30xx and ABX flights as 31xx, but they have occasionally run an ABX30xx or an ATN31xx where the one carrier covered for the other.
 
MKIAZ
Posts: 282
Joined: Thu May 01, 2014 5:24 am

Rumor: Amazon Starting In-house Airline - Part 1

Mon Nov 16, 2015 10:31 pm

Quoting jetblueguy22 (Reply 24):

I can't speak for FedEx, but I know we deliver our SurePost packages to the post office first thing in the morning. Usually in the city the post office has the packages before most of our Next Day Air customers. What they do with it from there is their business. Usually it takes 24 hours. Amazon most likely drops their stuff at the post office much earlier in the day.

Surepost and smartpost, while sounding similar are actually very different.

Smartpost (FedEx) is delivered further "upstream" to regional USPS facilities who then transport it out to the local post offices (thus the delay - it's usually delivered the next day after delivery to the USPS hub).

Surepost is delivered directly to the individual post offices serving customers. However sometimes it does not arrive in time to make that day's mail (depending on the post office). Also, depending on circumstances UPS can elect to deliver the packages themselves to the end customer (I.E. business address that ups already has other ground/air deliveries to). FedEx cannot do this.
 
wjcandee
Posts: 9736
Joined: Mon Jun 05, 2000 12:50 am

Rumor: Amazon Starting In-house Airline - Part 1

Tue Nov 17, 2015 1:17 am

Quoting MKIAZ (Reply 92):
Smartpost (FedEx) is delivered further "upstream" to regional USPS facilities who then transport it out to the local post offices (thus the delay - it's usually delivered the next day after delivery to the USPS hub).

In some places. In others, plenty of Smartpost gets transported to the DDU, and enters there. On Long Island, our smartpost goes to the DDU. In the City, our smartpost goes to the next zip over, which doesn't delay anything since the package truck comes from there to our address (or to the letter carrier's box). Once injected there, it is delivered the same day. [DDU is what the local post office is called in USPS-speak. Means "Destination Delivery Unit".]

I don't know if it's intentional -- I'm inclined to think that it is -- in the last year there has been induced an extra day's delay from when it leaves Edison to when it is injected to the system. It's a systemic delay. I have to assume that is to quell bitching by the Home Delivery independent contractors.

From the FedEx web site: "FedEx SmartPost has a completely integrated national network that picks up, sorts and delivers your packages directly to USPS entry points, primarily DDUs." and "The service results includes 98 percent on-time delivery for packages dropped off at Destination Delivery Units (DDUs)." http://www.fedex.com/us/smart-post/outbound.html#tab2

Where you lose a day with Surepost is because its sort and delivery is consistent, very often, with the regular brown truck delivery schedule. So, if it's coming to my address in 10021, it goes out on the same truck that is delivering to 10021, and just gets dropped off at the post office during that route. Which means that it rarely arrives before the cutoff for USPS delivery that day. Voila -- add a day because it's going to sit at 10021 when it gets "mailed" at 10am. The advantage of Surepost, however, is that the shipper's customer might get extra delight because it might end up being delivered a day earlier by the regular UPS guy. Here in NYC, for apartment buildings at least, it almost always is because they are going there anyway.

The dedicated services that use USPS for the last mile, like Amazon, Newgistics, DHL Smartmail (now eCommerce), and to some extent SmartPost, get the package reliably to the post office (DDU) before the day's acceptance cutoff for delivery that day, which at a rural post office can even be 8am-ish, although they often get it there much earlier. Amazon's in-house network is absolutely shaming Smartpost through its ability to bring something from Delaware to NYC and get it in the customer's hands the next day through delivery right to the DDU at like 3am. If it lands in Avenel, NJ by 10pm, it's going to be in my hands the next morning. Something that arrives at Smartpost Edison at 6pm will show processed that night, then be vapor for a day, and then be injected and delivered the following day. 24-36 hours just freakin' sitting after processing, while Amazon just loads it on their IC's van and off to my post office.

[Edited 2015-11-16 17:33:32]
 
jetblueguy22
Posts: 3505
Joined: Thu Nov 29, 2007 12:26 am

Rumor: Amazon Starting In-house Airline - Part 1

Tue Nov 17, 2015 7:07 am

Quoting MKIAZ (Reply 92):
Surepost is delivered directly to the individual post offices serving customers. However sometimes it does not arrive in time to make that day's mail (depending on the post office). Also, depending on circumstances UPS can elect to deliver the packages themselves to the end customer (I.E. business address that ups already has other ground/air deliveries to). FedEx cannot do this.

I know, I work in a UPS facility.
Pat
Look at sweatpants guy. This is a 90 million dollar aircraft, not a Tallahassee strip club
 
wjcandee
Posts: 9736
Joined: Mon Jun 05, 2000 12:50 am

Rumor: Amazon Starting In-house Airline - Part 1

Tue Nov 17, 2015 7:12 am

You know, Pat, I missed the part about UPS hitting the DDU before some Next Day Air gets delivered. I know you guys start early, so my own experience may have led to a mistaken understanding of how much Surepost actually makes it to the DDU before that day's delivery cutoff. Sorry if I was wrong about that, and about what the intent is, at least.
 
jetblueguy22
Posts: 3505
Joined: Thu Nov 29, 2007 12:26 am

Rumor: Amazon Starting In-house Airline - Part 1

Tue Nov 17, 2015 7:35 am

Quoting wjcandee (Reply 95):

You know, Pat, I missed the part about UPS hitting the DDU before some Next Day Air gets delivered. I know you guys start early, so my own experience may have led to a mistaken understanding of how much Surepost actually makes it to the DDU before that day's delivery cutoff. Sorry if I was wrong about that, and about what the intent is, at least.

You're not hurting my feelings, trust me! With services like SurePost I try to be careful how I address them and I'll tell you why.

SurePost as a service is very different than our traditional services. Next Day Air for example is very structured. If you're shipping from Phoenix to Hartford, you know what's going to happen, PHX-SDF-BDL and on the vehicle first thing the next morning. SurePost on the other hand is strange when it gets to the facility. I will just use my facility as an example. Our in town SurePost gets loaded into a box truck and gets delivered to the post office. Usually by 1000. What the PO decides to deliver that day is up to them. I've had SurePost delivered the same day it was tendered to the Post Office. I've also had others that have been delivered the next day. Outside of town it gets trickier. It may not get tendered until the driver is in that town at 3 PM. Or it may be his first stop. There is such a massive difference in service too between in town and small towns. In a small town the Postman knows everybody. If they see SurePost sitting at the Post Office he may go back out because he knew Milly was waiting for something from Target.

For the big cities, my knowledge is scarce at best. I've heard of some facilities sending SurePost in a fully loaded box truck to the post office. For all I know in NYC they could be sending trailers loaded with it. My concrete knowledge is pretty much limited to what we do here.
Pat
Look at sweatpants guy. This is a 90 million dollar aircraft, not a Tallahassee strip club
 
wjcandee
Posts: 9736
Joined: Mon Jun 05, 2000 12:50 am

Rumor: Amazon Starting In-house Airline - Part 1

Fri Nov 20, 2015 9:24 am

I saw this interesting article in DC Velocity from a month ago, which doesn't mention the air network, nevertheless gives some insight to Amazon's thinking and where it is in developing its own network. Bottom line -- they're hiring executives from package delivery companies.

http://www.dcvelocity.com/articles/2...pport-rollout-of-shipping-network/

And I thought it was interesting that this article, from two weeks ago, talks about Amazon "already load balancing between distribution centers". I don't know what that means precisely, but it probably involves moving stuff on an expedited basis, no? http://multichannelmerchant.com/opsa...logistics-transportation-06112015/

[Edited 2015-11-20 01:28:45]

[Edited 2015-11-20 01:29:21]
 
delta2ual
Posts: 559
Joined: Mon Dec 03, 2007 11:18 pm

Rumor: Amazon Starting In-house Airline - Part 1

Sat Nov 21, 2015 3:07 pm

Quoting wjcandee (Reply 97):
And I thought it was interesting that this article, from two weeks ago, talks about Amazon "already load balancing between distribution centers". I don't know what that means precisely, but it probably involves moving stuff on an expedited basis, no? http://multichannelmerchant.com/opsa...2015/

I ordered something last week (as a Prime member) and it was delivered the same day! You had to order by 1200 but I was pretty surprised to see that (and it was free). I'm not sure if that has anything to do with anything but I thought it was interesting nonetheless.  
I'm assuming that there is a distribution center near me in Central Florida.
From the world's largest airline-to the world's largest airline. Delta2ual
 
wjcandee
Posts: 9736
Joined: Mon Jun 05, 2000 12:50 am

Rumor: Amazon Starting In-house Airline - Part 1

Sun Nov 22, 2015 7:36 pm

A new development: ATI upgauged the ILN-ABE flight from a 762 to a 763 starting yesterday. I thought it might just be a one-off, but the 763 has now made two round-trips to ABE.

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos