The E-commerce giant Amazon is set to unveil the latest phase in its logistics program.
Prime Air made its inaugural flight from New York to Seattle last night setting the stage for the possibility of chartering up to 40 Boeing 767-300 jet freighters for integration within Amazon’s Flex Delivery System.
“GeekWire” broke the story yesterday evening announcing Amazon’s plan to showcase the new plane at the Boeing Seafair Air Show in Lake Washington today, and through the weekend.
A subscription based service, Amazon Prime offers “next day” and in key cities “same day” delivery utilizing their Amazon Flex system. Flex combines in-house trucking and Uber style drivers to deliver the last mile of purchases made through Prime. Prime Air will simply extend the reach of Amazon logistics allowing it to offer faster turnaround to more customers.
In house freighters and Uber drivers! Are they the next wave of product fulfillment?
Traditionally companies such as Amazon have turned to UPS and FEDEX to provide quick turnaround of product. These package services have built their reputation on the reliability of their service, providing package insurance tracking and proof of delivery on behalf of their clients. In 2015 UPS moved 18.3 million parcels 2.6 million of which moved by air. They maintain a fleet of 237 aircraft with an additional 305 jets on short-term charter. Running 940 daily flights, they serve 382 domestic airports. Clearly Prime Air is not looking to challenge the domestic package express business and it does maintain contracts with both FEDEX and UPS. Supplementing its rapid delivery system in house will however not only add flexibility but provide leverage when negotiating rates with the “Big Two”.
Fight or Flight! Who’s got skin in the game?
Amazon is not the first to buck the system by holding its own cards when it comes to transportation. In 2011 Wal-Mart commissioned Maersk for 15,000 TEU ships taken on charter. Carrying goods from China, the mega store shaved four days off the L.A. transit time offered by their ocean carrier partners. While the retail giant doesn’t charter aircraft for cargo, Wal-Mart Aviation has taken executive air travel to the next level. Relying less on commercial flights, the aviation division is fighting the high cost of air travel by moving their executives worldwide. Perhaps air cargo freighters are not such a farfetched idea for the future.
E or Omni finding new ways to reach the consumers faster!
While retailers are looking for ways to maximize their in house logistic capability whether by reducing the cost of freight or the movement of their executives, another concept is challenging the way we traditionally look at distribution. Today Wal-Mart is adopting an Omni Channel approach to marketing their products, offering consumers the ability to shop on-line or in retail outlets. Omni shopping gives the consumer flexible purchase, delivery and return options. It allows Wal-Mart to better control inventory by directing final distribution of merchandise through e-commerce, brick and mortar stores or fulfillment centers. Interestingly enough in 2015 Amazon opened its first pickup and delivery outlet on the campus of Purdue University. The firm plans to open between 300 to 400 stores primarily catering to student populations. This they feel is a unique way of trending the changing face of distribution.
Taking more freight out of the hands of the service provider, drone delivery? Where do we go next?
