Amazon, Walmart extend aisle to last-mile

Yesterday, Amazon announced an order with Mercedes-Benz for 20,000 delivery vans to support the company’s recently-unveiled last-mile delivery program, which for as little as US$10,000, will give third-party entrepreneurs and companies the tools to build out an independently-operated business around delivering parcels for the e-commerce giant. According to the company, all 20,000 Sprinter vans will be delivered to Amazon-affiliated independent operators by the end of 2019.   

When “Flex”, as the program is known, was first unveiled last summer, the company expected it would need just 4,500 vans – but Amazon has since seen overwhelming interest from entrepreneurs looking to join the program, prompting Amazon to up its order. To put this number in perspective, UPS’ global fleet of package cars, vans, tractors and motorcycles numbered about 119,000 in 2017.

Amazon is not the only retailer looking to dramatically expand its final-mile delivery options. Walmart has been testing a crowdsourced delivery platform called Spark Delivery, which works with a third-party company, Delivery Drivers Inc, to employ independent contractors that pickup orders from Walmart stores, and deliver them to customer homes. Walmart hopes to go live with the program in 100 domestic cities by the end of the year. Amazon’s Flex is already active in 50 cities, but with the expansion, CNN reports that Amazon hopes to see 100 of the small delivery businesses, using thousands of its new vans, operating by the end of 2018.

An expansion of this magnitude is likely to reduce Amazon’s future reliance on its current delivery partners. At present, the US Postal Service handles about 40% of Amazon’s last-mile deliveries in the US, while Amazon Flex drivers will use their own cars.

Amazon’s ground network expansion comes just as its initial dedicated freighter operations scheme becomes fully operational. Separate deals with Air Transport Services Group (ATSG) and Atlas Air Worldwide Holdings call for a total of forty 767-300 freighters – 20 operated by ATSG subsidiary carriers, ATI International and ABX Air, and 20 operated by Atlas Air. ATSG has already managed to put all twenty aircraft into service for Amazon. Next week, Atlas Air will put three more aircraft into service for Amazon, bringing the number of aircraft in operation for Amazon to 38. The last two of the 40 committed aircraft are currently undergoing conversion to freighter configuration, and will enter into service with Atlas Air, to be operated on behalf of the e-commerce giant before Thanksgiving.

With an expanding ground network, and a$1.5 billion air hub under construction at Cincinnati/Northern Kentucky Airport (CVG), Amazon is looking increasingly like an integrator. But will it become one?

Learn more about e-commerce its impact on demand for freighter aircraft 10-12 October at  Cargo Facts Symposium, where a roundtable panel discussion will be dedicated to the topic. For more information, or to register, visit www.cargofactssymposium.com.