FedEx and UPS consider Amazon a customer rather than a competitor. But how large of a distribution network does Amazon need to build before the designation changes?
Amazon said in a securities filing on Friday that it has acquired just under a 10-percent stake in Air Transport Services Group (ATSG), the company that two weeks ago leased the retailer 20 cargo jets. Not only does the investment provide Amazon more of a say in how ATSG handles Amazon’s business, but Amazon can also learn more about airfreight.
The investment comes as Amazon rapidly increases its ability to deliver its own packages to customers’ doors. In addition to enlisting jets, Amazon has acquired access to cargo ships and large moving vans and is pushing hard for US regulators to approve drone delivery. Amazon also is testing an Uber-esque home delivery service, called Amazon Flex, that relies on private drivers to carry packages to customers’ homes.
All this effort has convinced some in the industry that Amazon intends to move into the shipping business. Last week, all the chatter finally prompted a response from one of the big package-delivery companies. Following FedEx’s earnings report, CEO Mike Glenn dismissed the idea that Amazon posed a competitive threat, Bloomberg reported. “Concerns about industry disruption continue to be fueled by fantastical — and I chose this word carefully — articles and reports.”
Glenn says it would cost Amazon many billions of dollars to compete with the likes of UPS and FedEx. Maybe, but as Glenn laughs at the idea, Amazon at minimum seems intent on reducing the money it shells out to those companies.
Last month, the web’s top retailer reported net-shipping costs reached an all-time high of $1.85 billion during the fourth quarter of 2015, and surpassed $5 billion for the full year.