The online retail giant will be making delivery by drones and is rumored to be entering the air cargo market Amazon.com is up to something, and what it is up to may forever change supply chains and logistics. The company is out in the open on its development of drones and its desire to use the small pilotless aircraft to make quick deliveries to customers. But the company has remained silent on reports that it is testing the waters to acquire a fleet of aircraft for inter-city deliveries. The picture that emerges is that Amazon is a company that wants to take greater control of its logistics and supply chain. Amazon is already exerting a significant impact on supply chains and ecommerce globally because of the company’s focus on same-day delivery and its developing relationships with 3PLs for last-mile delivery, according to a recent survey of third-party logistics provider CEOs sponsored by Penske Logistics. Ecommerce now accounts for 12 percent of North American 3PLs’ revenue, according to the survey, and CEOs predict it will increase to 21 percent in three years. Similar trends are evident in Europe and Asia. “Amazon’s recent actions are impacting ecommerce in a major way,” said Robert Lieb, professor of supply-chain management at Northeastern University. “The company’s market dominance and huge popularity with customers creates a great opportunity for 3PLs to assist Amazon.” But evidence is mounting that Amazon is also doing a lot to help itself with deliveries. Reports speculate that the company is frustrated in its long-standing relationship with UPS, thanks to occasional bottlenecks, especially during holiday shipping seasons. On the drones front, Amazon recently unveiled prototypes of the aircraft it intends to use for its future delivery system known as Prime Air. Prime Air, once approved by regulators, will get packages up to five pounds to Amazon customers in 30 minutes or less. “Prime Air has great potential to enhance the services we already provide to millions of customers by providing rapid parcel delivery that will also increase the overall safety and efficiency of the transportation system,” the company said, in a statement. “Putting Prime Air into service will take some time, but we will deploy when we have the regulatory support needed to realize our vision.” While the Federal Aviation Administration has been slow in developing a regulatory scheme for drone deliveries, some progress has been made. In an FAA-sanctioned test, a first, a drone successfully dropped medical supplies to a health clinic in rural Virginia last summer. The delivery was made by a drone operator, Australian startup Flirtey—which already provides drone deliveries in New Zealand, where it is allowed by law. “This was a Kitty Hawk moment not just for Flirtey, but for the entire industry,” said Flirtey CEO Matt Sweeny. “Proving that unmanned aircraft can deliver lifesaving medicines is an important step toward a future where unmanned aircraft make routine autonomous deliveries of everyday purchases.” For drone deliveries to happen the FAA would have to promulgate regulations that would designate airspace for the unmanned vehicles, ensuring safety and security. Deliveries by drone are already a fait accompli in a number of countries, including New Zealand, China, and Germany. According to a report from Innova Research, the easing of regulatory restrictions on drones in the U.S. is anticipated to take place in 2017. “Important safety and logistical matters needed to be considered by the FAA to make this happen,” said Rose Mooney, executive director of the Mid-Atlantic Aviation Partnership at Virginia Tech University, which ran the summer drone flight in Virginia last summer. Amazon has published papers with its proposals for integrating Prime Air vehicles into the airspace. In a nutshell, Amazon is advocating that certain communication and navigation capabilities be required to gain access to certain airspace. Drone operators will be allowed airspace access depending on the capabilities of their vehicles and where they intend to operate. Amazon advocates carving out “segregated blocks of airspace below 500 feet and away from most manned aviation operations.” The drone program shows that Amazon has been working to exercise greater control over its supply chain. Another example: Amazon announced it is acquiring thousands of trailers to handle its growing volume of packages, to be transported by third-party carriers. “We know that there is supplemental capacity needed in the market, so we are supplementing our existing carriers with our own trailer equipment,” Mike Roth, Amazon’s vice president of North America operations, told the Chicago Tribune in early December. Way beyond helping itself with ground transportation, press reports in recent days have indicated that Amazon.com is in talks to lease 20 Boeing 767 jets. The purpose would be to launch its own air cargo wing so it can be less dependent on UPS, FedEx, and the postal service. Some reports have even speculated that Amazon will venture beyond making its own deliveries to providing those same services to other shippers. Other reports indicate that Amazon conducted tests in 2014 of a potential air delivery system out of Wilmington, N.C., and has been operating a Boeing 737 between the UK, Poland, and Germany since last November. For the record, none of these reports have quoted anyone from Amazon. An Amazon spokesperson told the AJOT that the company would refuse to comment on “rumors and speculation.” If true, Amazon would be working to avoid the snafu that occurred two years ago, when holiday volume overwhelmed UPS and many Amazon customers received gifts after Christmas. Some reports show that package-delivery services fell behind this holiday season as well, but these have been denied by the carriers. According to the Wall Street Journal, Amazon’s shipping costs with UPS have increased 12.5 percent over the last year. Given Amazon’s stated intentions and the successful completion of drone deliveries elsewhere, it’s a near certainty that the tiny aircraft will be making household deliveries before too long. But the industry is still waiting for Amazon to come clean on its air-cargo ambitions, especially if it is to offer space to other companies, putting it in competition with UPS and FedEx. If those rumors are true, Amazon could really shake up the package delivery business.