More freighters for Amazon?

Note — 17 March 2017: We have added a comment from Amazon at the end of this post.

In the last 24 hours, we have heard from two separate sources that Amazon is in talks to acquire more freighter aircraft.

How many more? Are you sitting down?

None of the parties involved would comment on the rumors, and Cargo Facts has not been able to verify them independently, but here is what we have been told. We’ll start with the smaller, easier-to-swallow version, which is that Amazon is negotiating with Boeing for the purchase of one hundred 767-300Fs.

One hundred.

And that is the easier of the two stories to believe. The second is that Amazon is talking to Wall Street investors about financing for four hundred aircraft. Yes, that’s what you read — four hundred.

As noted above, we have not been able to verify either of these rumors, and, as rumors often do, they may turn out to exaggerated — or completely wrong. But however they eventually prove out, it is worth thinking about what Amazon’s fleet plans might be. Start with the “one hundred 767-300Fs.” Would it make sense for Amazon to order that many freighters? Isn’t the forty they have already committed to enough?

Before answering that question, consider that even if Amazon were to order 767 freighters from Boeing tomorrow, it would be some time before they received the first one (FedEx and the US Air Force are in line ahead of any new customer). Looked at with that in mind, and also considering that e-commerce will continue to drive growth in demand for air freight for many years, a big order might make sense.

• The Prime Air fleet will reach forty units by the end of 2018, and by that time, there could well be a need for more lift to support Amazon’s US operations.

• The leases on the freighter-converted 767s currently operated for Amazon by ATSG and Atlas will begin to expire in 2023,  and Amazon might wish to replace them with new-build equipment. So, however many freighters Amazon orders, some of them will be replacements for existing capacity, rather than additional capacity.

• And finally, Amazon does not operate only in the US. The company is also began running a trial air operation in Europe back in 2015, and may decide to set up a permanent air network there. Amazon is also keen to expand in Asia. (To say nothing of importing goods from Asia to the US and Europe).

So, in our view, an order for one hundred 767 freighters (or a mix of 767 and 777 freighters, plus some freighter-converted 737s) over a multi-year period is not as crazy as it might seem at first sight.

Four hundred aircraft, on the other hand, does seem crazy. Unless Amazon is planning to set itself up as a provider of air freight lift on the open market…

…or contemplating passenger operations…

Note: On 17 March 2017, Amazon told Cargo Facts: “There is no truth to either of these rumors.”

Those interested in learning more about this subject should join us at Cargo Facts Asia in Shanghai, 25 – 26 April, where senior executives from ATSG, DHL Express, and YTO Express will participate in a session titled “The Impact of e-Commerce on Air Freight & Express.” For more information, or to register, go to CargoFactsAsia.com.