Amazon.com this week made the long-awaited announcement that it will begin operating its own air freight network in the U.S.
The e-commerce giant will lease 20 Boeing 767 freighter aircraft from Air Transport Services Group over the next five to seven years.
ATSG's airlines — ABX Air and Air Transport International — will operate the planes on Amazon's behalf for at least the next five years, and the company's LGSTX Services will provide logistics for the network.
Amazon, meanwhile, will receive warrants to acquire nearly one-fifth of ATSG's common stock over the next five years. More importantly, the e-retailer will be able to build out its own shipping network.
Reports about Amazon's plans to lease cargo planes surfaced late last year as the company dealt with delays among its traditional parcel partners that struggled to keep up with online shopping demands.
"We’re excited to supplement our existing delivery network with a great new provider, ATSG, by adding 20 planes to ensure air cargo capacity to support one and two-day delivery for customers,” said Dave Clark, Amazon senior vice president of worldwide operations and customer service.
The move also coincides with efforts to expand Amazon's internal trucking and ocean-borne shipping operations, and the company is expected to complete the acquisition of French delivery company Colis Privé in coming weeks.
The ATSG network is expected to be based in Wilmington, Ohio, where Amazon conducted an air freight trial at a former DHL hub.
Although the company says the new operation will complement its current partners, analysts eventually analysts believe that the Amazon could compete directly with parcel giants UPS and FedEx.
