Amazon Fleet Growing

wjcandee · Mon Jan 30, 2017 11:38 pm

Thanks, Yochai!! All I needed was tail numbers.

N505CS is an Atlas 763 that doesn't have an Amazon number associated with it yet, that we thought was being stored at TLV since November. Is conversion underway?
N633GT is a great find! An Amazon-destined Atlas aircraft that I thought might have snuck into TLV from Shanghai in June. To be N1093A. Maybe completed soonish?
N1229A is an Amazon-destined Atlas aircraft that has been in TLV since October.
N337AZ is an Amazon-destined ATI aircraft that started conversion in December.
N371AA is an Amazon-destinated ATI aircraft that started conversion in late November. Will be N353AZ.
N370AA is owned by CAM (a sister company of ATI), and doesn't show as going to Amazon. Started conversion in very-late December.
N396AX is an Amazon-destined ATI aircraft that started conversion in late October. Will be N347AZ.
N385CM is an Amazon-destined ATI aircraft that started conversion in August. Will be N331AZ. I'm thinking that's the next one off the line for Amazon.
N284DH is going to DHL in Great Britain after conversion, owned by DHL. It's been out of service for a while. Is it in conversion, or just sitting around?
N376CM is another aircraft (soon to be finished) owned by CAM and not destined for Amazon as far as we know. Been in TLV since July.

With regard to the ATI/CAM aircraft, we usually use 6 months as a round number from when they arrive until when they have the heavy maint work and the conversion complete. On the ATI aircraft, I'm just saying that because until it goes on the certificate, it can go anywhere. But that seems to be the plan for now.

Thanks so much! So that confirms that we know about all of the aircraft that were going to be converted for ATI and the three for CAM (the third one being N395CM when it gets there).

And you have given us some great teasers re Atlas aircraft. If they started work in June on N633GT, it might be done soon for Atlas/Amazon. If you come up with any others, we are interested!

wjcandee · Mon Jan 30, 2017 11:55 pm

bravoindia wrote:
Atlas filed to bring N1997A back to ABE again tonight we'll see if it comes in and a) if a new route starts tomorrow or this week or b) they swap it out again and if N1049A stays or goes.

Thanks for the heads-up! And as you say, we will see what they do with it!

BobPatterson · Mon Jan 30, 2017 11:57 pm

wjcandee wrote:
With regard to the ATI/CAM aircraft, we usually use 6 months as a round number from when they arrive until when they have the heavy maint work and the conversion complete. On the ATI aircraft, I'm just saying that because until it goes on the certificate, it can go anywhere. But that seems to be the plan for now.

Does anyone have a realistic idea of what such a heavy check/conversion might cost? Six months of work sounds awfully expensive.

And what might have been the cost of the aircraft itself?

hkcanadaexpat · Tue Jan 31, 2017 3:26 am

yochai wrote:
wjcandee wrote:
There are quite a few 767's in TLV right now..not sure which ones go to Atlas and which to ATI,CAM or DHL but here's a list of the 767's I'm aware of at the moment:

you can N631GT/N1217A which is undergoing conversion in QPG!

wjcandee · Tue Jan 31, 2017 4:16 am

HK: Yes, thank you!

I mentioned that frame in a post yesterday about Atlas. Do you know of any others at or destined for QPG?

I had asked Yochai if he could identify all the 763s at Bedek, since he is over there. Do you know whether that N505CS Atlas frame that he said is there will be going to Amazon? I know you are the guru of 767 status and future!

yochai · Tue Jan 31, 2017 12:34 pm

N395CM now scheduled to arrive at TLV on Friday ,February 2nd 0730UTC. N385CM is scheduled for delivery on the same day to KILN at 1100UTC

wjcandee · Tue Jan 31, 2017 4:06 pm

Awesome info, Yochai! That's closer to a five-month turnaround. Great job by IAI/Bedek. As mentioned above, we have been using six months as an average turnaround time, because that's the experience in the real world with these aircraft for ATI's parent. However, IAI has always said that they can do a cargo door and floor installation alone in a couple of months. The inspection and heavy maintenance that is usually done concurrently is the thing that makes the time uncertain. Parts have to be located and ordered, planning and executing fixes for the problems found, etcetera.

BI: 1997A is on your lot, having finally come in this morning. Let's see what happens to it and 1049a today. Fingers crossed for something interesting.

wjcandee · Tue Jan 31, 2017 6:25 pm

BravoIndia, I guess we have our answer. N1997A is stepping into the ONT-DFW-ABE-ONT route, and N1049A is heading back to RME, which presumably means it's going back to Premier for some work. Atlas might just be storing it there for a while, but I'm thinking that some more work is more likely. Interesting, but disappointing.

yochai · Tue Jan 31, 2017 6:53 pm

Bedek is working hard to get those 767's converted ASAP as they have a lot of aircraft waiting to enter the conversion line...from past experience it usually takes 6 months indeed however some of these recent conversions were quicker which is probably due to spare parts available on short notice.

Ahmad310x · Tue Jan 31, 2017 9:59 pm

Looks like fleet will be based out of CVG - http://www.bizjournals.com/cincinnati/n ... t-cvg.html

wjcandee · Tue Jan 31, 2017 11:28 pm

I have been pulling for ILN, but I was afraid that something like this might happen.

They're talking about using "DHL's facilities" for a while? That doesn't sound right and the author clearly doesn't understand what Amazon actually *does* at ILN. Talk about getting in bed with nitwits. Maybe just use some space to do the cross-docking. In my view, staying far away from DHL -- like at another airport -- would have been smarter, but whatever.

sunking737 · Wed Feb 01, 2017 12:24 am

Wow this sure got more interesting...Time for some pop corn, soda, and a comfortable chair.....Thanks to everyone who is in the know on this.

wjcandee · Wed Feb 01, 2017 12:37 am

The most interesting facts in the article were:

3-million (!!!!) square foot building.

100 (!!!!) aircraft parking spaces.

Of course, I am well aware from experience that when developers talk about X million square feet in multiple phases (or a Second Avenue Subway with 20 stations), the only thing that is likely to be built is Phase I with its 250,000 sq ft starter building (or a stub track and 4 stations). But this is Amazon, so that changes things a bit.

jetmatt777 · Wed Feb 01, 2017 1:00 am

wjcandee wrote:

3-million (!!!!) square foot building.

Just for some visual idea of warehouse square footage, Hobby Lobby's distribution warehouse in Oklahoma City has just over 6.1 million square feet of warehouse space, and takes up nearly a square mile of total ground space (total facility space including open space for trailer parking, offices, and support facilities).

So, imagine this complex (highlighted in blue) cut in half. Given that Amazon processes much more goods, and is a much larger company than Hobby Lobby, I could easily see them expand the footprint of this proposed CVG facility to be closer in size to Hobby Lobby in OKC.

wjcandee · Wed Feb 01, 2017 1:24 am

Nice images, Matt. For what it's worth, all Amazon does at present is cross-dock, not store or meaningfully-sort, the materials that pass through ILN. They don't need to, because the limited points of origin per aircraft mean that they can build pallets heading all-together to a particular destination. They aren't sorting individual packages, and shouldn't really ever need to, as long as they are carrying their own stuff or other companies' stuff that comes to them pre-sorted. So that's why I thought 3 million sq. ft was a lot. But you have given us a very interesting comparison nevertheless, and it's food for thought. The article quoted above has some pictures of where their facilities will go at CVG.

I can't extract the photo from the web page, but it is here: http://www.bizjournals.com/cincinnati/n ... vg.html#g2

Also, given how many routes are already set up to bypass the "hub", 100 parking spaces means a lot more flights and aircraft in the network than that.

cvgComair · Wed Feb 01, 2017 2:17 am

I just updated the master plan map on Wikipedia, the planned Amazon Expansion is in Yellow, its massive compared to the terminal area and DHL hub facilities:

I would not be surprised to see CVG work on taxiway improvements around the DHL area since runway 18R/36L was used only for a few years before DL started downsizing. Currently its rarely used due to its distance from the terminal area, but Amazon could make good use of it, though it probably needs to be lengthened 1000 ft to accommodate the 767's.

MajMattMason · Wed Feb 01, 2017 3:25 am

cvgComair wrote:

I would not be surprised to see CVG work on taxiway improvements around the DHL area since runway 18R/36L was used only for a few years before DL started downsizing. Currently its rarely used due to its distance from the terminal area, but Amazon could make good use of it, though it probably needs to be lengthened 1000 ft to accommodate the 767's.

While an extra 1000 feet would be welcomed, ABX, ATI and Atlas routinely operate out of ABE at 7500'.
36L/18R is 8000' I think?

CX747 · Wed Feb 01, 2017 3:31 am

I would love to be a fly on the wall of the fleet planning division for Amazon. Where and how are they going to get all of these 767s?!?! If they source them all used, I will be extremely impressed.

nikeson13 · Wed Feb 01, 2017 3:40 am

When we first saw the Amazon flying with Aerosmith, I thought that we talked that the cross-docking looked to be a temporary method since they had such a limited list of destinations and planes, thus it was easy and efficient to operate. Then as they grew to a certain size, they would be able to have a true sorting capability and be able to serve a much broader range of destinations with more frequency. And look at the figures that are thrown out there in this article:

Seattle-based Amazon has committed to invest $1.49 billion and bring nearly 3,000 new jobs to the region... Amazon has promised 2,700 new jobs, 600 of which will be full-time... Amazon will build several facilities on nearly 920 acres of CVG land, including a 3 million-square-foot sorting facility and a 350,000 square-foot loading dock. It also plans to build enough ramp space to house 100 cargo jets, more than what DHL has.

The amount of space will easily be ample to sort, have a mx area, and enough stands for the 40 frames currently coming let alone more (maybe not 100, that seems a bit steep IMO).

cvgComair wrote:
Currently its rarely used due to its distance from the terminal area, but Amazon could make good use of it, though it probably needs to be lengthened 1000 ft to accommodate the 767's.

It doesn't look like there is much space to lengthen 18R/36L, possibly 200-500ft on the north end. Of course you could extend it south by a lot, but then you deal with it intersecting 9/27.

rockyracoon · Wed Feb 01, 2017 3:45 am

jetmatt777 wrote:
So, imagine this complex (highlighted in blue) cut in half.

Thanks for the visual aid, I was just pondering the scale.

jetmatt777 · Wed Feb 01, 2017 3:48 am

nikeson13 wrote:
The amount of space will easily be ample to sort, have a mx area, and enough stands for the 40 frames currently coming let alone more (maybe not 100, that seems a bit steep IMO).

The Boeing 767-300 line is still open, producing air force tankers. Would Boeing cut Amazon a deal on 40-60 new 767-300Fs similar to the deal Boeing gave United on the 73G's. The production cost of the 767-300 is most likely completely paid for by now, so it would be a cheap opportunity cost to keep the line open several more years. I can assume it would be easy profit for Boeing.

cvgComair · Wed Feb 01, 2017 4:02 am

nikeson13 wrote:
The amount of space will easily be ample to sort, have a mx area, and enough stands for the 40 frames currently coming let alone more (maybe not 100, that seems a bit steep IMO).

It doesn't look like there is much space to lengthen 18R/36L, possibly 200-500ft on the north end. Of course you could extend it south by a lot, but then you deal with it intersecting 9/27.

It sounds like plans are to get much larger than 200 daily departures/arrivals. The article: http://www.wcpo.com/news/local-news/boo ... hub-at-cvg, reports in its video that CVG would grow to the 3rd or 4th largest cargo airport in the world according to Amazon's plans. That is a massive amount of cargo to be transported!!! CVG is 34th in the world currently, but looking at the planned area to be used, its room for 100 planes at a time as they said. That is room for way more than 40 aircraft, they must have plans for more aircraft that we are not aware of currently!

As far as runway 18R/36L goes, they could always shift 275 north if they really needed, its only 2 lanes on each side in that part of Cincinnati. I have read that Amazon's 767's weigh a lot less because they do not carry dense cargo, so it probably is not even necessary to lengthen the runway. Runway 9/27 is usually used for departures, while 18C/36C and 18L/36R are used for arrivals. It would be cool to see triple simultaneous arrivals again!

nikeson13 · Wed Feb 01, 2017 4:44 am

cvgComair wrote:
nikeson13 wrote:
The amount of space will easily be ample to sort, have a mx area, and enough stands for the 40 frames currently coming let alone more (maybe not 100, that seems a bit steep IMO).

It doesn't look like there is much space to lengthen 18R/36L, possibly 200-500ft on the north end. Of course you could extend it south by a lot, but then you deal with it intersecting 9/27.

It sounds like plans are to get much larger than 200 daily departures/arrivals. The article: http://www.wcpo.com/news/local-news/boo ... hub-at-cvg, reports in its video that CVG would grow to the 3rd or 4th largest cargo airport in the world according to Amazon's plans. That is a massive amount of cargo to be transported!!! CVG is 34th in the world currently, but looking at the planned area to be used, its room for 100 planes at a time as they said. That is room for way more than 40 aircraft, they must have plans for more aircraft that we are not aware of currently!

As far as runway 18R/36L goes, they could always shift 275 north if they really needed, its only 2 lanes on each side in that part of Cincinnati. I have read that Amazon's 767's weigh a lot less because they do not carry dense cargo, so it probably is not even necessary to lengthen the runway. Runway 9/27 is usually used for departures, while 18C/36C and 18L/36R are used for arrivals. It would be cool to see triple simultaneous arrivals again!

Well I doubt we'll see it that busy for another 10-15 years, a lot to build plus a lot of planes to add. One can't just create a large cargo op like this in 5 years, it will take time but I wouldn't doubt it hitting 100 planes. Possibly as more 777s and A330s retire as 787s/A350s/A330NEOs/777Xs/etc come into service, maybe Atlas or one of the other two operators may take some used conversions to add another fleet type to the Prime Air fleet. We talked about their intra-Euro flights previously, possibly they may want to connect some of their large US distribution centers with places in Europe in the future?

And yeah, looking at 275 North again it would probably be easy to do, but the airport has plenty of time to build it if needed no rush.

jetmatt777 wrote:
The Boeing 767-300 line is still open, producing air force tankers. Would Boeing cut Amazon a deal on 40-60 new 767-300Fs similar to the deal Boeing gave United on the 73G's. The production cost of the 767-300 is most likely completely paid for by now, so it would be a cheap opportunity cost to keep the line open several more years. I can assume it would be easy profit for Boeing.

I think that Boeing is moving away from the 767 and onto bigger and better things for that production line

. The speed at which they are testing and making the new KC767s is remarkably strange for a US military project. Plus, with used frames so cheap and being retired regularly now and into the future, the capital needed for used+conversion is so much less than new. Amazon has been picking used vs. new so far, even picking up frames that nobody ever thought would see flight again (the AA frames especially). The 5X order was mainly a deal to hold the production line open till the KC program was greenlighted and production started, and I doubt we will ever see another 767 order sadly

.

Acey559 · Wed Feb 01, 2017 5:00 am

Rumor around ILN is that Amazon has already placed an order for new-build 767Fs from Boeing, but I have nothing to back that up other than crew room banter. Larger aircraft are also rumored from multiple sources, including those in management, but again, nothing at all substantiated.

nikeson13 · Wed Feb 01, 2017 6:01 am

Acey559 wrote:
Rumor around ILN is that Amazon has already placed an order for new-build 767Fs from Boeing, but I have nothing to back that up other than crew room banter. Larger aircraft are also rumored from multiple sources, including those in management, but again, nothing at all substantiated.

I possibly spoke too soon about the longevity of the 767... Maybe the experiences so far with the secondhand frames everyone thought were going to become Coors Light cans are pushing Amazon to relook the strategy of going used...

On another note, to think about the direction Prime Air is going now is insane when looking at how this all started. After that horrible holiday season where both 5X and FX horribly failed Amazon, angry Amazon went to test the feasibility of taking some of the shipping in-house, launches the secret Aerosmith Project to fly a couple planes, quietly flying to small underused airports such as SCK, ABE, and ILN, and slowly expanding their fleet and routes. Seeing that Amazon thought they can do better than the two largest logistics companies seemed crazy back then, but now look at the success of the program both in the air and on the ground. Congrats to Amazon, Atlas, ATSG, CVG, and all other involved in this growing and successful operation, I can't wait to see what the future of Prime Air looks like.

Question(probably wjcandee knows the answer): For the frames that CAM already bought to convert to lease over to sisters ABX and ATI, were those funded by Amazon or ATSG themselves? I'm pretty sure a new order would be funded by Amazon, but I can't recall the details about the original Aerosmith frames and the ones added to date.

FX1816 · Wed Feb 01, 2017 12:11 pm

cvgComair wrote:
nikeson13 wrote:
The amount of space will easily be ample to sort, have a mx area, and enough stands for the 40 frames currently coming let alone more (maybe not 100, that seems a bit steep IMO).

It doesn't look like there is much space to lengthen 18R/36L, possibly 200-500ft on the north end. Of course you could extend it south by a lot, but then you deal with it intersecting 9/27.

It sounds like plans are to get much larger than 200 daily departures/arrivals. The article: http://www.wcpo.com/news/local-news/boo ... hub-at-cvg, reports in its video that CVG would grow to the 3rd or 4th largest cargo airport in the world according to Amazon's plans. That is a massive amount of cargo to be transported!!! CVG is 34th in the world currently, but looking at the planned area to be used, its room for 100 planes at a time as they said. That is room for way more than 40 aircraft, they must have plans for more aircraft that we are not aware of currently!

As far as runway 18R/36L goes, they could always shift 275 north if they really needed, its only 2 lanes on each side in that part of Cincinnati. I have read that Amazon's 767's weigh a lot less because they do not carry dense cargo, so it probably is not even necessary to lengthen the runway. Runway 9/27 is usually used for departures, while 18C/36C and 18L/36R are used for arrivals. It would be cool to see triple simultaneous arrivals again!

The Amazon flights out of ONT (ABX, ATI & GTI) tend to get airborne between 5500 and 6500 down either runway 26L/8R (12200) or 26R/8L (10200). Now I don't know how the loads look though.

Boeing727 · Wed Feb 01, 2017 12:34 pm

FX1816 wrote:
The Amazon flights out of ONT (ABX, ATI & GTI) tend to get airborne between 5500 and 6500 down either runway 26L/8R (12200) or 26R/8L (10200). Now I don't know how the loads look though.

It also depends on what type of reduced takeoff power (FLEX) is used; in the past we rotated (A300) at about the 5,000' mark out of KSDF, but with our new procedures that has lengthened our takeoff roll to about 7,000'. On the contrary we operate out KSNA (restricted to 300,000lbs on rwy 2L) with 5,700' available.

Boeing727

DeltaRules · Wed Feb 01, 2017 12:48 pm

Good for CVG, but ILN getting taken to the cleaners not once, but twice, is brutal. Their rise from the ashes story was pretty improbable, yet another company goes down 71.

wjcandee · Wed Feb 01, 2017 1:14 pm

Responding to a couple of questions: Amazon originally spoke to Boeing about new-builds, but they couldn't be brought on line fast enough. They have always liked the 763 over the 762, but because of DHL's own actions in destroying Airborne Express, there were quite a few 762s available. So they went with those immediately, an initial investment in an expanding experiment from which they could still withdraw, to be followed with converted aircraft. I always thought (and now think) that the expansion after 2018 will be largely with new-build aircraft if they're sticking with the 763. There will be plenty of 767-300s coming off passenger service by then, but a smart fleet for a larger carrier includes reliable new-builds that you can fly the crap out of and lower-capital-cost conversions that you can use on short segments and then nurse at the outstation, and keep in reserve for peak. If they want more lift per flight, some converted larger aircraft may also be useful as they try that out.

As to funding, IIRC the way they did it was to enter into dry leases of a specific period with CAM and Titan. All the -200s were already owned by CAM, and the -300s were to be acquired and converted. With regard to CAM, the 12 767-200s are on 5 year leases from April 1, 2016 (6 signed in April, 6 more signed in September), and the 8 767-300s are on 7 year leases (3 signed by end 2016). ATI and ABX are contracted for 5 years to operate all 20 of the aircraft. So...CAM owns the frames, CAM financed the acquisition and conversion of the 767-300s, backstopped by basically-irrevocable leases to Amazon. The operating agreements are for 5 years, but, as is typical, they have a termination-for-convenience clause, which, IIRC, is a little-more-considerate of ATSG than some are. It's like 120 or 180 days, IIRC.

As I said before, although Amazon plainly is planning big and splashy, the reality is that it is staking out the opportunity for future expansion without necessarily committing to an operation that large. You gotta buy the real estate now, when everybody is trying to give it away, rather than later, when you are stuck there and the politicians and landowners want to extort stuff from you. Wait until the NIMBYs start whining 3 or 4 years from now and those same politicians start breaking your shoes. Stuff gets built in phases and ramped up, and usually the later phases never get built. With Amazon, of course, its biggest dreams often end up being exceeded, so we will see how all this goes.

My own feeling is that getting in bed with DHL is an enormous mistake for the labor reasons I discussed, and also because I still think of them as the complete idiots that destroyed their own great opportunity in the US through their arrogance and refusal to listen to the folks who knew how to make the US operation work. I would stay far away from them, but apparently Amazon doesn't feel the same.way.

FX1816 · Wed Feb 01, 2017 1:21 pm

Boeing727 wrote:
FX1816 wrote:
The Amazon flights out of ONT (ABX, ATI & GTI) tend to get airborne between 5500 and 6500 down either runway 26L/8R (12200) or 26R/8L (10200). Now I don't know how the loads look though.

It also depends on what type of reduced takeoff power (FLEX) is used; in the past we rotated (A300) at about the 5,000' mark out of KSDF, but with our new procedures that has lengthened our takeoff roll to about 7,000'. On the contrary we operate out KSNA (restricted to 300,000lbs on rwy 2L) with 5,700' available.

Boeing727

Exactly, I'm not sure what they are doing in the flight deck but it's completely possible that they aren't using full power settings on take off. It's still nice to see them getting airborne just as they pass us in the tower though!

wjcandee · Wed Feb 01, 2017 1:24 pm

DeltaRules wrote:
Good for CVG, but ILN getting taken to the cleaners not once, but twice, is brutal. Their rise from the ashes story was pretty improbable, yet another company goes down 71.

I feel horrible for them, but at least operations like AMES will have an expanding source of business and keep good jobs in the community. And never say never. CVG and environs could still screw this up.

bravoindia · Wed Feb 01, 2017 2:27 pm

Takeoffs at Abe are routinely between 4000 and 5500-6000'. As in completely airborne by those numbers even for the Ontario flight. Take a few hundred or more away in the winter when it's normal to be sustained winds between 15-25 kt and cold temps. Not so much for rwy 6 but when we are on 24 it's more often than not to see them rotate prior to the 13-31 intersection.

Acey559 · Wed Feb 01, 2017 2:49 pm

The -200s routinely take off around 265k-295k, so pretty light. I think I've only seen a -200 above 300k once or twice. The planes are bulked out way before weight becomes an issue, but lately we've been taking a lot more fuel out to SCK because of the wind/fog/rain. 8000' is plenty for what we routinely fly, though more runway is always better.

wjcandee · Wed Feb 01, 2017 3:33 pm

10701 is a nice length... But whatever.

sunking737 · Wed Feb 01, 2017 4:07 pm

Does any one think that Amazon could get planes from other carriers?? Right now they use the 767-200/300 but if they need additonal lift that other planes could be used...ex 747F or 777F ?? What about MD11?? Maybe Airbus too..?? What about smaller freighters ???

ILNFlyer · Wed Feb 01, 2017 4:35 pm

wjcandee wrote:
Nice images, Matt. For what it's worth, all Amazon does at present is cross-dock, not store or meaningfully-sort, the materials that pass through ILN. They don't need to, because the limited points of origin per aircraft mean that they can build pallets heading all-together to a particular destination. They aren't sorting individual packages, and shouldn't really ever need to, as long as they are carrying their own stuff or other companies' stuff that comes to them pre-sorted. So that's why I thought 3 million sq. ft was a lot. But you have given us a very interesting comparison nevertheless, and it's food for thought. The article quoted above has some pictures of where their facilities will go at CVG.

I can't extract the photo from the web page, but it is here: http://www.bizjournals.com/cincinnati/n ... vg.html#g2

Also, given how many routes are already set up to bypass the "hub", 100 parking spaces means a lot more flights and aircraft in the network than that.

Much of what happens at ILN is aircraft to aircraft transfers. The ground portion is different. They build out the loads inside from arriving trucks and load them onto the aircraft; it is not a true sort. Most of it is sorted and on pallets that get built to go onto the aircraft.

I am very disappointed that CVG was chosen, but it is logical. The region has the population base to support the operation whereas ILN is in a remote location where the population somewhat thin, and CVG has the scope and size to accommodate a national hub. I'm sure the $40 Million in tax incentives didn't hurt Amazon's feelings either.

ILNFlyer · Wed Feb 01, 2017 4:40 pm

DeltaRules wrote:
Good for CVG, but ILN getting taken to the cleaners not once, but twice, is brutal. Their rise from the ashes story was pretty improbable, yet another company goes down 71.

Indeed. Twice in 10 years. I don't think this town will ever trust another cargo operation again.

LightningZ71 · Wed Feb 01, 2017 5:38 pm

Ok, just a quick thought. Since their cargo aircraft tend to volume out before hitting gross weight limits, would Amazon Prime be a decent candidate for a double decker parcel freight version of the A-380? With two decks, it will have plenty of usable volume. With light weight pallets of bulk goods, it wouldn't require a lot of floor strengthening. Aside from wider cargo doors and floor pallet management systems, there shouldn't be a lot of work to do on them. They would make excellent intercontinental haulers, especially if they buy up the used birds from the ME3.

I know, just a wild idea...

Spacepope · Wed Feb 01, 2017 5:47 pm

LightningZ71 wrote:
Ok, just a quick thought. Since their cargo aircraft tend to volume out before hitting gross weight limits, would Amazon Prime be a decent candidate for a double decker parcel freight version of the A-380? With two decks, it will have plenty of usable volume. With light weight pallets of bulk goods, it wouldn't require a lot of floor strengthening. Aside from wider cargo doors and floor pallet management systems, there shouldn't be a lot of work to do on them. They would make excellent intercontinental haulers, especially if they buy up the used birds from the ME3.

I know, just a wild idea...

It;ll more likely be the Bedek 777 P2F program, as older 772s are retired with life still in them, and the Bedek one only has minimal floor strengthening, not like the 77F new build program.

jetblueguy22 · Wed Feb 01, 2017 6:36 pm

nikeson13 wrote:
Acey559 wrote:
Rumor around ILN is that Amazon has already placed an order for new-build 767Fs from Boeing, but I have nothing to back that up other than crew room banter. Larger aircraft are also rumored from multiple sources, including those in management, but again, nothing at all substantiated.

I possibly spoke too soon about the longevity of the 767... Maybe the experiences so far with the secondhand frames everyone thought were going to become Coors Light cans are pushing Amazon to relook the strategy of going used...

On another note, to think about the direction Prime Air is going now is insane when looking at how this all started. After that horrible holiday season where both 5X and FX horribly failed Amazon, angry Amazon went to test the feasibility of taking some of the shipping in-house, launches the secret Aerosmith Project to fly a couple planes, quietly flying to small underused airports such as SCK, ABE, and ILN, and slowly expanding their fleet and routes. Seeing that Amazon thought they can do better than the two largest logistics companies seemed crazy back then, but now look at the success of the program both in the air and on the ground. Congrats to Amazon, Atlas, ATSG, CVG, and all other involved in this growing and successful operation, I can't wait to see what the future of Prime Air looks like.

Question(probably wjcandee knows the answer): For the frames that CAM already bought to convert to lease over to sisters ABX and ATI, were those funded by Amazon or ATSG themselves? I'm pretty sure a new order would be funded by Amazon, but I can't recall the details about the original Aerosmith frames and the ones added to date.

5X and FX didn't "Fail" Amazon. That is a great story they like to use, it was all on them. When you offer guaranteed Christmas Eve delivery all the way up to December 23rd you have to expect some issues. That is why both companies eliminate the guarantee the week leading up to Christmas.

Amazon is doing a great job of moving a lot of transportation in house, but one thing we are missing in the whole thing is they are only serving major metro areas. To maintain the speed and efficiency of UPS and FedEx they need to invest in infrastructure in a massive way. Building a hub in CVG and buying 100 planes isn't going to do that. They can reap massive benefits in major metro areas such as NYC, Boston, DC, Miami, Minneapolis, Chicago, Phoenix, Los Angeles, San Francisco, and Seattle, but it becomes difficult outside of those cities. Stop density becomes an issue. That is how many stops can you deliver in say a 1 mile area. Amazon may ship an insane amount of packages everyday (and I witness it first hand), but Prime Air will struggle outside of the cities, as it does not make financial sense. That's where they benefit having 5X and FX.

jetmatt777 · Wed Feb 01, 2017 7:01 pm

jetblueguy22 wrote:
nikeson13 wrote:
Acey559 wrote:
Rumor around ILN is that Amazon has already placed an order for new-build 767Fs from Boeing, but I have nothing to back that up other than crew room banter. Larger aircraft are also rumored from multiple sources, including those in management, but again, nothing at all substantiated.

I possibly spoke too soon about the longevity of the 767... Maybe the experiences so far with the secondhand frames everyone thought were going to become Coors Light cans are pushing Amazon to relook the strategy of going used...

On another note, to think about the direction Prime Air is going now is insane when looking at how this all started. After that horrible holiday season where both 5X and FX horribly failed Amazon, angry Amazon went to test the feasibility of taking some of the shipping in-house, launches the secret Aerosmith Project to fly a couple planes, quietly flying to small underused airports such as SCK, ABE, and ILN, and slowly expanding their fleet and routes. Seeing that Amazon thought they can do better than the two largest logistics companies seemed crazy back then, but now look at the success of the program both in the air and on the ground. Congrats to Amazon, Atlas, ATSG, CVG, and all other involved in this growing and successful operation, I can't wait to see what the future of Prime Air looks like.

Question(probably wjcandee knows the answer): For the frames that CAM already bought to convert to lease over to sisters ABX and ATI, were those funded by Amazon or ATSG themselves? I'm pretty sure a new order would be funded by Amazon, but I can't recall the details about the original Aerosmith frames and the ones added to date.

5X and FX didn't "Fail" Amazon. That is a great story they like to use, it was all on them. When you offer guaranteed Christmas Eve delivery all the way up to December 23rd you have to expect some issues. That is why both companies eliminate the guarantee the week leading up to Christmas.

Amazon is doing a great job of moving a lot of transportation in house, but one thing we are missing in the whole thing is they are only serving major metro areas. To maintain the speed and efficiency of UPS and FedEx they need to invest in infrastructure in a massive way. Building a hub in CVG and buying 100 planes isn't going to do that. They can reap massive benefits in major metro areas such as NYC, Boston, DC, Miami, Minneapolis, Chicago, Phoenix, Los Angeles, San Francisco, and Seattle, but it becomes difficult outside of those cities. Stop density becomes an issue. That is how many stops can you deliver in say a 1 mile area. Amazon may ship an insane amount of packages everyday (and I witness it first hand), but Prime Air will struggle outside of the cities, as it does not make financial sense. That's where they benefit having 5X and FX.

UPS and FedEx may honestly not want that much business in that manner. The cost to add the additional airplanes (very expensive long term investments) to handle the additional volume may actually mean they may lose money on the deal. If Amazon has enough volume to fill 100 airplanes per day in the long term, that means UPS and FedEx would each need to add at least 50 airplanes to their fleet, more ramp space, more hangar space, more sorting space, more flights to more outstations which requires a ramp up of manpower. All this for 1 customer -- that's a multi-billion dollar investment to secure the resources to add that much capacity to your system without affecting your existing customers. It's a tall order, and Amazon may not have had a choice but to do the high-volume transportation themselves as UPS and FedEx may have indicated that they weren't willing to invest billions of dollars into new infrastructure to benefit 1 customer. I wouldn't be surprised to see UPS and FedEx to add more flights into CVG, though, to get packages that Amazon can't deliver into the broader FedEx or UPS network.

MKIAZ · Wed Feb 01, 2017 7:13 pm

jetblueguy22 wrote:
nikeson13 wrote:
Acey559 wrote:
. Stop density becomes an issue. That is how many stops can you deliver in say a 1 mile area. Amazon may ship an insane amount of packages everyday (and I witness it first hand), but Prime Air will struggle outside of the cities, as it does not make financial sense. That's where they benefit having 5X and FX.

I'm not so sure. Once AZ pulls all the big city business from 5X and FX, you can bet 5X and FX will jack up pricing for rural deliveries, thus making Prime Air probably more reasonable in comparison. And if AZ continues it's growth trajectory, they sure can have alot of volume even to smaller areas. And think, they time the flight to get in earlier, say 1am. Then they can load the freight into semi's and have contractors drive it potentially hundreds of miles out from the airport into rural areas for delivery by even more contractors in vans.

It's actually very smart. Instead of needing a delivery hub to serve rural areas like Fedex and UPS have, they can simply bring all the freight in on a plane, load it onto semi's at the airport, drive out out and have local drivers take it right off the semi's.

And this is going to be HUGE for the CVG area. Not only for the airport, but think of all the new FC's that will be built in the area. Once you have nightly flights from CVG to ~40ish markets, it becomes a whole lot more attractive to store a ton of inventory in that area to be able to easily get it on the flights.

wjcandee · Wed Feb 01, 2017 7:15 pm

JBGuy: You might want to think of the line-haul and local delivery as separate issues, because Amazon does. You are correct that they are doing a certain amount of local delivery through contracted local carriers, but the USPS is still the big Kahuna when it comes to 2-day package final mile. Amazon local delivery is primarily tasked to services like same-day and next-day, and Amazon Fresh. The Amazon Fresh delivery guys on Long Island, for example, also fill the rest of their van with regular Amazon packages to maintain sufficient density to make the Amazon Fresh worthwhile. Most 2nd day stuff in NYC and Long Island, two very dense areas, still arrives by the USPS, and that will likely continue.

The way I view the model is that you start with the local delivery operation, through whatever final-mile carrier matrix you are going to use. You feed that final-mile primarily with packages that arrive from a regional Sorting Center, which in turn is fed primarily by packages trucked in from many Distribution Centers, all within driving distance. The Prime Air component serves only to bring in packages containing goods that couldn't be trucked in, i.e. had to be originated too far away to truck. Prime Air may also be used to balance the supply of certain items at Distribution Centers when that has to be done quickly. Prime Air is thus brought in once a local delivery option, either by USPS or supplemented with contracted carriers, is established. There are many, many areas of the country where such a setup makes sense. Frankly, anywhere that [email protected] functioned could use a truck-to-USPS model. Other sparser areas could/would still use UPS/FedEx from origin to delivery. Also, as the Amazon-directed network still only carries a portion of the overall Amazon volume (as it should), there will always be volume, including higher-price overnight volume, that will flow over UPS/FedEx to everywhere. Also, because a portion of "Amazon-sold-and-shipped" items are drop-shipped from manufacturers (including a lot of auto parts, a growing area for Amazon), those providers will likely continue to use the carriers they always do: UPS and FedEx. The right way to do all this is to pick the low-hanging fruit first, meaning the denser areas.

I also have questions about the long-term viability of the Amazon-contracted local delivery stuff and Amazon Flex. If they continue to hire companies that use independent contractors, the fact that labor lawyers are these days heavily-invested in "employee misclassification" lawsuits means that there will continue to be a lot of financial pressure on those providers, and while they are largely-fungible and there are low barriers to entry, those operations will likely continue to get more expensive as they get hammered on the labor law front. Even with Trump in the White House, state legislatures in many areas of significant population will continue to make it hard for these operations to survive. So the USPS will always have a place at the table, and it actually does a wonderful job here in NYC and on Long Island, two places that you wouldn't expect it to function well. I'm confident that in most of America, where the Post Office runs much better, it will be even more-reliable than it is here.

So, in sum, wherever Amazon can establish an organic or USPS final-mile option, Prime Air will have a place at the table. Obviously, to reduce directionality, you also want the airport destinations to be places that also have distribution centers with material to originate. However, Amazon is already apparently analyzing other opportunities to backhaul pallets of stuff where the stream is necessarily-directional. No reason that the USPS couldn't be talking to Amazon about moving some of their air volume when/where the price is right, for example. Also, as with the express carriers, no reason that some of the Prime Air lift couldn't be on smaller aircraft. Northern Air Cargo ran some 734s for them in the early stages of their experiment, and although that wasn't continued, it doesn't mean that Amazon didn't put the data from their experience away for use in the future.

My 2 cents, anyway.

nikeson13 · Wed Feb 01, 2017 8:33 pm

wjcandee wrote:
So, in sum, wherever Amazon can establish an organic or USPS final-mile option, Prime Air will have a place at the table. Obviously, to reduce directionality, you also want the airport destinations to be places that also have distribution centers with material to originate. However, Amazon is already apparently analyzing other opportunities to backhaul pallets of stuff where the stream is necessarily-directional. No reason that the USPS couldn't be talking to Amazon about moving some of their air volume when/where the price is right, for example. Also, as with the express carriers, no reason that some of the Prime Air lift couldn't be on smaller aircraft. Northern Air Cargo ran some 734s for them in the early stages of their experiment, and although that wasn't continued, it doesn't mean that Amazon didn't put the data from their experience away for use in the future.

My 2 cents, anyway.

This is along the lines that I was thinking. Directionality of the current setup will need to be addressed, and that will be hard for them. Also, we could see an evolution in the way they do 1-day shipping. When you order a package currently, they are most likely at a local center where they will be packaged and shipped, and if it isn't housed locally they will ship it via UPS, FX, or Prime Air + USPS, or they might not even offer you the 1-day option. Possibly Prime Air can evolve to serving places where there is demand, but not enough to warrant a local distribution center to be built and thus there isn't the option for 1-day currently. For example, lets say you live in Billings, MT where there isn't a center for over 500 of miles (nearest one is the one being built in Denver). Amazon could offer your area limited 1-day delivery, in which they put it on a Prime Air plane in CVG, fly it into BIL, and then give it over to USPS for the last mile to your house. Just an idea, but it could be a way to serve more rural areas better.

jetblueguy22 · Wed Feb 01, 2017 8:37 pm

jetmatt777 wrote:
jetblueguy22 wrote:
nikeson13 wrote:
I possibly spoke too soon about the longevity of the 767... Maybe the experiences so far with the secondhand frames everyone thought were going to become Coors Light cans are pushing Amazon to relook the strategy of going used...

On another note, to think about the direction Prime Air is going now is insane when looking at how this all started. After that horrible holiday season where both 5X and FX horribly failed Amazon, angry Amazon went to test the feasibility of taking some of the shipping in-house, launches the secret Aerosmith Project to fly a couple planes, quietly flying to small underused airports such as SCK, ABE, and ILN, and slowly expanding their fleet and routes. Seeing that Amazon thought they can do better than the two largest logistics companies seemed crazy back then, but now look at the success of the program both in the air and on the ground. Congrats to Amazon, Atlas, ATSG, CVG, and all other involved in this growing and successful operation, I can't wait to see what the future of Prime Air looks like.

Question(probably wjcandee knows the answer): For the frames that CAM already bought to convert to lease over to sisters ABX and ATI, were those funded by Amazon or ATSG themselves? I'm pretty sure a new order would be funded by Amazon, but I can't recall the details about the original Aerosmith frames and the ones added to date.

5X and FX didn't "Fail" Amazon. That is a great story they like to use, it was all on them. When you offer guaranteed Christmas Eve delivery all the way up to December 23rd you have to expect some issues. That is why both companies eliminate the guarantee the week leading up to Christmas.

Amazon is doing a great job of moving a lot of transportation in house, but one thing we are missing in the whole thing is they are only serving major metro areas. To maintain the speed and efficiency of UPS and FedEx they need to invest in infrastructure in a massive way. Building a hub in CVG and buying 100 planes isn't going to do that. They can reap massive benefits in major metro areas such as NYC, Boston, DC, Miami, Minneapolis, Chicago, Phoenix, Los Angeles, San Francisco, and Seattle, but it becomes difficult outside of those cities. Stop density becomes an issue. That is how many stops can you deliver in say a 1 mile area. Amazon may ship an insane amount of packages everyday (and I witness it first hand), but Prime Air will struggle outside of the cities, as it does not make financial sense. That's where they benefit having 5X and FX.

UPS and FedEx may honestly not want that much business in that manner. The cost to add the additional airplanes (very expensive long term investments) to handle the additional volume may actually mean they may lose money on the deal. If Amazon has enough volume to fill 100 airplanes per day in the long term, that means UPS and FedEx would each need to add at least 50 airplanes to their fleet, more ramp space, more hangar space, more sorting space, more flights to more outstations which requires a ramp up of manpower. All this for 1 customer -- that's a multi-billion dollar investment to secure the resources to add that much capacity to your system without affecting your existing customers. It's a tall order, and Amazon may not have had a choice but to do the high-volume transportation themselves as UPS and FedEx may have indicated that they weren't willing to invest billions of dollars into new infrastructure to benefit 1 customer. I wouldn't be surprised to see UPS and FedEx to add more flights into CVG, though, to get packages that Amazon can't deliver into the broader FedEx or UPS network.

One thing that 5X has on its side is the ground network. You'd be surprised how much 2 Day and even Next Day air packages never see the inside of an aircraft or air facility.

You nailed it with the losing money. I have no idea what rate Amazon actually pays, but I know the margins are razor thin. There was a number I saw online one time that says Amazon accounts for 6% of revenue and less than half a percent of the profit.

jetblueguy22 · Wed Feb 01, 2017 8:40 pm

MKIAZ wrote:
jetblueguy22 wrote:
nikeson13 wrote:

I'm not so sure. Once AZ pulls all the big city business from 5X and FX, you can bet 5X and FX will jack up pricing for rural deliveries, thus making Prime Air probably more reasonable in comparison. And if AZ continues it's growth trajectory, they sure can have alot of volume even to smaller areas. And think, they time the flight to get in earlier, say 1am. Then they can load the freight into semi's and have contractors drive it potentially hundreds of miles out from the airport into rural areas for delivery by even more contractors in vans.

It's actually very smart. Instead of needing a delivery hub to serve rural areas like Fedex and UPS have, they can simply bring all the freight in on a plane, load it onto semi's at the airport, drive out out and have local drivers take it right off the semi's.

And this is going to be HUGE for the CVG area. Not only for the airport, but think of all the new FC's that will be built in the area. Once you have nightly flights from CVG to ~40ish markets, it becomes a whole lot more attractive to store a ton of inventory in that area to be able to easily get it on the flights.

I think you're greatly underestimating how far apart rural deliveries are. You're talking about 10 miles between some stops in our operation. Entire counties getting 100 packages from all different customers, not just Amazon. It's a lot easier to make money when you have other business to fill in the cracks. Otherwise it's largely a loss making operation.

And what you describe Amazon doing is exactly what UPS and FedEx does thousands of times a day.

jetblueguy22 · Wed Feb 01, 2017 8:49 pm

wjcandee wrote:
JBGuy: You might want to think of the line-haul and local delivery as separate issues, because Amazon does. You are correct that they are doing a certain amount of local delivery through contracted local carriers, but the USPS is still the big Kahuna when it comes to 2-day package final mile. Amazon local delivery is primarily tasked to services like same-day and next-day, and Amazon Fresh. The Amazon Fresh delivery guys on Long Island, for example, also fill the rest of their van with regular Amazon packages to maintain sufficient density to make the Amazon Fresh worthwhile. Most 2nd day stuff in NYC and Long Island, two very dense areas, still arrives by the USPS, and that will likely continue.

The way I view the model is that you start with the local delivery operation, through whatever final-mile carrier matrix you are going to use. You feed that final-mile primarily with packages that arrive from a regional Sorting Center, which in turn is fed primarily by packages trucked in from many Distribution Centers, all within driving distance. The Prime Air component serves only to bring in packages containing goods that couldn't be trucked in, i.e. had to be originated too far away to truck. Prime Air may also be used to balance the supply of certain items at Distribution Centers when that has to be done quickly. Prime Air is thus brought in once a local delivery option, either by USPS or supplemented with contracted carriers, is established. There are many, many areas of the country where such a setup makes sense. Frankly, anywhere that [email protected] functioned could use a truck-to-USPS model. Other sparser areas could/would still use UPS/FedEx from origin to delivery. Also, as the Amazon-directed network still only carries a portion of the overall Amazon volume (as it should), there will always be volume, including higher-price overnight volume, that will flow over UPS/FedEx to everywhere. Also, because a portion of "Amazon-sold-and-shipped" items are drop-shipped from manufacturers (including a lot of auto parts, a growing area for Amazon), those providers will likely continue to use the carriers they always do: UPS and FedEx. The right way to do all this is to pick the low-hanging fruit first, meaning the denser areas.

I also have questions about the long-term viability of the Amazon-contracted local delivery stuff and Amazon Flex. If they continue to hire companies that use independent contractors, the fact that labor lawyers are these days heavily-invested in "employee misclassification" lawsuits means that there will continue to be a lot of financial pressure on those providers, and while they are largely-fungible and there are low barriers to entry, those operations will likely continue to get more expensive as they get hammered on the labor law front. Even with Trump in the White House, state legislatures in many areas of significant population will continue to make it hard for these operations to survive. So the USPS will always have a place at the table, and it actually does a wonderful job here in NYC and on Long Island, two places that you wouldn't expect it to function well. I'm confident that in most of America, where the Post Office runs much better, it will be even more-reliable than it is here.

So, in sum, wherever Amazon can establish an organic or USPS final-mile option, Prime Air will have a place at the table. Obviously, to reduce directionality, you also want the airport destinations to be places that also have distribution centers with material to originate. However, Amazon is already apparently analyzing other opportunities to backhaul pallets of stuff where the stream is necessarily-directional. No reason that the USPS couldn't be talking to Amazon about moving some of their air volume when/where the price is right, for example. Also, as with the express carriers, no reason that some of the Prime Air lift couldn't be on smaller aircraft. Northern Air Cargo ran some 734s for them in the early stages of their experiment, and although that wasn't continued, it doesn't mean that Amazon didn't put the data from their experience away for use in the future.

My 2 cents, anyway.

USPS is not the big show at Amazon, UPS and FedEx are. For Prime Air stuff, you are absolutely correct, but not for everything else. UPS and FedEx still take on the overwhelming majority of packages, though as more distribution centers open in metro areas that is changing. But there is also a strange phenomenon occurring. Every hub that has an Amazon distribution center open initially loses volume, but eventually much of it comes back. The post office is getting better, but they are struggling to keep up with the extra volume that Amazon is throwing their way. They can do final mile well, but Amazon will have to take all the linehaul on themselves if they want to switch big time over to the post office. Amazon is still growing at such an incredible pace that they have to spread their volume out or they will be in trouble. I'm not joking when I say it would knock your socks off if you looked at how much Amazon volume flows through just my small UPS facility everyday. I'm a Prime member and have yet to have anything delivered by the post office.

The other problem with the post office is hours. I would argue it should work better in places like Long Island because they have scale on their side. Here in the sticks, it isn't that way. Most post offices are only open a handful of hours a day. If you don't make it to that post office in time that stuff is waiting another day.

bravoindia · Wed Feb 01, 2017 9:34 pm

Off topic compared to the recent talk but of note the ATI B763 that usually goes to RFD from ABE tonight is leaving to go to charlotte as ATN3260, not sure if the CLT-SCK run was delayed or what, que will lol. Let me know.

wjcandee · Wed Feb 01, 2017 11:37 pm

BI: It looks like 311AZ took a two-hour delay in CLT, but ultimately took off on ATN3033 and is in the air now. Could be that this ATN3260, which would be 307AZ, was gonna fly down there to cover it if necessary, but it appears now that that won't be necessary and I suspect they won't actually go. If they do, then that may be significant.

lightsaber · Thu Feb 02, 2017 12:08 am

sunking737 wrote:
Does any one think that Amazon could get planes from other carriers?? Right now they use the 767-200/300 but if they need additonal lift that other planes could be used...ex 747F or 777F ?? What about MD11?? Maybe Airbus too..?? What about smaller freighters ???

This CVG venture means Amazon must buy more. They are very metric driven, so it will be a cost benefit.

No MD-11s or 747s, there is too much low hanging fruit I see first:
1. More used 767-300 conversions are certain.
2. I could see 777F orders to bring freight from China, but only for the right price.
3. An A380 freighter is unlikely, but cannot be ruled out.
4. New build 767Fs are likely. But only a fraction of the used fleet.
5. Small possibility of an A330F fleet, but Airbus isn't going to like the prices.

Due to Amazon's partnership deals, I see nothing smaller than a 767 for a decade. I refuse to make longer term predictions, but for now767 or larger.

Due to low used 767 prices, I think Amazon will stick with conversions for a bit. Next most likely a low bid from Boeing on new 767s. I alternate on the likelihood of anything else.

If used A330s drop in price, I could see opportunity buying/conversions.

Lightsaber

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