How Amazon is Changing Up Their Logistics Approach

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We?re way past drones these days — according to Market Watch, has decided to lease 20 freighter aircrafts, representing a major push forward in the company?s air and ocean logistics. Many analysts have predicted that this type of move would, indeed, be necessary in order for Amazon to push back against its high costs of delivery that otherwise eat into profit.

Amazon will be leasing the Boeing 767s from Air Transport Services Group, allowing Amazon to shift away from its dependency on Fed Ex and UPS in the U.S. This not only allows Amazon more control over its logistics, but also allows it to create systems that are more efficient — which is difficult when it?s working with partnering shipping companies to deliver products.

Shares are Up

Shares of Amazon were up 1.3% on Friday, though the last three months overall have seen an underperformance. Much of this can be linked back to the company?s profit margins, which continue to experience hits. Though the company has still managed to record record profits, Amazon?s decision to expand their delivery services ate into potential earnings rather heavily.

Amazon has made multiple changes over the past few years in order to place itself on the forefront of shipping: more fast and affordable than what anyone else is offering. So far, Amazon owns 80 shipping facilities across the U.S., which collectively have over 80 million square feet of space.

Amazon Moving Forward: Practically Door to Door Selling

How else does Amazon plan to move forward? Market Watch indicates that the company plans on opening more Prime Now Hubs — they are a lot smaller than the traditional fulfillment centers, allowing the company to operate more efficiently at these locations. In a way, Amazon plans on doing “door to door selling” considering it offers an incredible two hour shipping on some items.

Does Amazon plan on competing with other cargo companies? Although it could, feasibly, one day compete with American cargo shipping companies, most predict that they will not try to commercialize their network and will only use it for themselves.

Though market researchers may question Amazon’s ability to move forward, the truth is, this company has continually shown its ability to innovate and accurately predict important market trends.

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