Amazon is working on expanding its Prime Air cargo fleet to encompass 200 planes by 2027 or 2028, reports Bloomberg. Currently, the e-commerce service utilizes 42 freight aircraft to move goods across the world.
Once fully upgraded, the corporation’s air delivery segment will near the size of the United Parcel Service’s (UPS) aerial transportation capacity.
Amazon’s Air Fleet
Initially an online bookseller, Amazon has established itself as one of the world’s largest retailers in the last 26 years. As it has expanded, the firm has run into problems with delivery providers like FedEx that view it as competition. In response, the company created its Prime Air fleet to supplement and better manage its global supply chain in 2016.
Recently, the corporation has worked aggressively to increase its number of freight aircraft. In less than a year, the firm has doubled its fleet size and will expand it by a factor of five within the decade. As part of the initiative, the company will also spend $1.5 billion building a facility in Cincinnati, Ohio, which will accommodate 100 planes and 200 flights per day.
DePaul University’s Chaddick Institute of Metropolitan Development published a report indicating Amazon’s new hub might allow it to offer overnight package transportation. By doing so, the corporation will further reduce its reliance on third-party logistics providers and expedite its package deliveries. In addition, the e-commerce brand’s supply chain enhancements are not limited to its cargo plane fleet.
The Future of E-Commerce Logistics
Last June, Wired reported Amazon deployed a fleet of last-mile ground delivery drones called Scouts in Washington State. The company utilized six logistics bots to gather mapping data and transport goods throughout Snohomish County. Three months later, the online retailer expanded the Scout project into Irvine, California.
Amazon has also dedicated some of its resources to developing more robust autonomous vehicle solutions.
Last year, the corporation took part in a $530 million Series B fundraising round conducted by self-driving car company Aurora. Amazon explained it had an interest in harnessing the firm’s technology to make its operation safer and more productive.
Amazon also placed an order for 100,000 electric delivery vans from battery-powered vehicle startup Rivian. The e-commerce company said it made the purchase as part of its broader commitment to protecting the environment. But the corporation also likely has an interest in the burgeoning automaker’s in-development self-driving car platform.
Despite possessing a market capitalization of over $1 trillion, Amazon’s rising spending costs have severely cut into its profitability.
In 2018, the corporation spent $27.7 billion transporting goods to consumers. But one year later, the firm’s logistics costs skyrocketed 36.68 percent to $37.9 billion. The company’s transportation spending is likely to be much higher this year as it brought 100,000 staffers to meet COVID-19 generated demand.
By building its air freight division, electrifying its ground fleet, and developing last-mile bots, Amazon is working to lower its logistics costs and ensure its long-term financial stability.