Amazon.com on Nov. 12 took delivery of the 40th and final plane in a lease deal for its expanding air-cargo operation. More may be on the way.
A senior executive at an aircraft lessor said Amazon was shopping around for more Boeing 767 freighters and had put out a request for proposals for an additional six jets earlier this year. It’s unclear how far along Amazon is in that process. A spokeswoman declined to comment.
Amazon jumped into the airfreight business in 2016, striking a deal with Air Transport Services Group to lease 20 used Boeing 767 cargo jets.
Two months later, it announced its intentions to lease 20 more planes, this time from Atlas Air Worldwide Holdings. That deal also granted Amazon the option to acquire as much as 20% of the Purchase, N.Y.-based company, and an additional 10% should Amazon increase its business with Atlas.
Ted S. Warren/Associated Press
Amazon took delivery of the final aircraft from Atlas at a ceremony at an airport in Long Beach, Calif.
Sarah Rhoads, director of Amazon Air, said in an interview earlier this year that she was focused on integrating the new aircraft into Amazon’s expanding logistics operations before the arrival of the peak U.S. holiday shopping season. Still, the 40th delivery represents “kind of a noteworthy milestone,” she added.
Potentially complicating Amazon’s search for more jets is a tight market for Boeing 767 freighter aircraft, the result of a lack of used passenger models available for conversion, said the aircraft-lessor executive, who requested anonymity to preserve business relationships. He speculated that Amazon may end up turning to the Airbus A330 freighter to expand its fleet more quickly. Bloomberg News reported earlier this year that potential interest from Amazon and UPS Inc. had spurred Airbus to consider a freighter variant of the new, neobranded variant of the widebody aircraft.
Amazon Air’s fleet takes packages bound for customers to regional Amazon sortation centers, part of the “middle mile” journey in logistics speak. At sort centers, workers group items going to the same area for handoff to an Amazon local delivery hub or U.S. Postal Service office for last-mile delivery.
Air Transport Services Group and Atlas lease and operate Amazon Air's planes. (Ted S. Warren/Associated Press)
“We’re that elastic band in the middle mile,” Rhoads said.
The company, she said, continues to rely on traditional carriers such as UPS and FedEx Corp. But in recent years, Amazon’s need to move goods around its fast-growing logistics network meant exploring internal options.
The delivery of Amazon’s 40th plane was timed to coincide with Veterans Day. Rhoads, a former U.S. Navy pilot, started her career at Amazon working in the company’s warehouse cluster in Kentucky before growing responsibilities took her to Britain. It is common to find former armed-service members in Amazon’s order fulfillment and operations groups, where they can make use of logistics or supply chain training they received in the military.
The company said Nov. 12 that it employs nearly 20,000 veterans and spouses of service members, up from about 17,500 a year ago.
Amazon still is in the planning stages of an announced $1.49 billion investment in a massive freight hub at Cincinnati/Northern Kentucky International Airport in Hebron, Ky., that the airport says includes capacity for 100 or more planes.
The carriers that lease and operate Amazon Air’s planes — Air Transport Services Group and Atlas — are involved in a contentious labor dispute with the pilots’ union, which charges that the operators offer substandard pay and require long hours that threaten their safe operation.
Since Amazon came onboard as their best-known customer, the pilots have urged the online retailer to apply pressure to its contractors, demonstrating and picketing outside Amazon’s Seattle headquarters.
Rhoads said the company hadn’t been affected by the labor strife and was able to maintain consistent performance.
“We have a resilient network,” she said.