Amazon is growing its fleet of cargo aircraft with the lease of 10 additional 767-300 planes that will add capacity to its delivery network.
The company has expanded its partnership with Air Transport Services Group, which will now operate 30 freighter aircraft on Amazon’s behalf. The 10 additional jets will be added over the next two years.
Amazon Air, which launched in 2016, will have 50 planes in its network. There are currently 40 aircraft flying in and out of more than 20 airports.
The planes are part of Amazon’s growing delivery network that also includes more than 10,000 truck trailers that travel to and from more than 185 fulfillment centers worldwide.
In addition to using delivery partners such as UPS and FedEx, Amazon is increasingly relying on its own logistics infrastructure as shipping costs continue to spike with growing demand, particularly from Prime members who pay $119 per year for free 2-day shipping and access to Amazon’s 2-hour Prime Now delivery service.
Amazon’s shipping costs ballooned to $21.7 billion in 2017, up from $16.2 billion in 2016 and $11.5 billion in 2015. In its annual 10-K SEC filing published this past February, the company said it expects the cost of shipping to continue increasing. Amazon changed its Prime annual membership rate from $99 to $119 this year.
Last month Amazon announced that it would offer free holiday shipping to all of its customers on hundreds of millions of items, a potentially costly competitive move designed to keep pace with similar moves by the company’s retail rivals.
Analysts speculate that Amazon’s delivery and shipping operations could take market share from companies like FedEx and UPS. Earlier this week, FedEx CEO Fred Smith said he doesn’t consider Amazon as a competitor.
