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Old 03-05-2019, 09:43 PM
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whalesurfer
Gets Weekends Off
 
Joined APC: Feb 2013
Posts: 1,339
Red face Yet another Amazon thread..

I know, I know, we’ve had plenty of Amazon threads here already.. haha.

I’ve always said that I don’t view Amazon as an imminent threat BUT I sure hope our (brown) management takes this future threat seriously.

A close friend’s son is at a regional airline right now, he’s building his pic-time. For quite some time he’s been very focused on working for purple or for brown and I still think that’s his best bet.

However, he’s only 25 so he’s got many years ahead of him..

- IF Amazon is the RyanAir/Norwegian Air type of a threat US pax airlines are/will be facing in the near future - is Amazon the same or a similar type of threat cargo airlines will face?
- If so, would he be better off at a cargo airline (purple, brown, someone else?) or a pax airline? (and if so, which one?)

I’m afraid I might be too biased to give him an objective suggestion..

- What recommendation would you give a 20-some year old?

Thanks..


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Amazon took over the $176 billion market for cloud computing. Now it's using the same playbook in logistics.

• A number of industry experts say Amazon is prepping to take on FedEx and UPS.
• Amazon says its network is used only to move goods in-house to manage its quickly rising shipping costs.
• But its network of ocean freight containers, trailers, fulfillment centers, cargo planes, and more is so large that not even Amazon could fill it, analysts say.
• Amazon's moves in logistics lines up with how it launched Amazon Web Services, the company's cloud-computing solution, now the leader in a $176 billion market.

Amazon announced the day after Christmas that it delivered an astounding 1 billion parcels over the holiday season "for free."

Yet the complicated logistics network that allows Amazon to move goods — from factory to ship to loading dock to train to truck to fulfillment center to van to your doorstep — is anything but free.

Amazon's worldwide shipping costs have grown fifteenfold from 2009 to 2018. Net sales increased by sevenfold in the same time.

"Amazon is doing everything possible to keep their shipping expense low because it's ballooning," Marc Wulfraat, the president and founder of supply-chain consultancy MWPVL International, told Business Insider.

One strategy to keep shipping costs low, according to Amazon CFO Brian Olsavsky, is moving more and more of the company's shipping in-house instead of relying on third parties such as UPS, FedEx, or USPS. He said on a recent investor call that Amazon can move its own packages more accurately and more cheaply.

But numerous industry experts point to another motivation for Amazon's sudden build-up of branded Amazon planes, trucks, and delivery vans, as well as its ever-expanding network of fulfillment centers.

Rather than simply looking to shrink its shipping cost, they told Business Insider that Amazon is adding yet another business to its roster: shipping and delivery. Amazon declared itself a transportation company in its most recent SEC filing and is rolling out a third-party shipping service for merchants on its site.

"The fact is that Amazon has always been a logistics and supply-chain company," Michael Zakkour, the vice president of global digital commerce and new retail at Tompkins International, told Business Insider. "The greatest trick that Jeff Bezos ever pulled is allowing people to believe that he wants to create the everything store. Bezos has concentrated his investments around logistics and technology."


'This is not a small network'

Morgan Stanley analyst Ravi Shanker said it's clear that Amazon is looking to break into third-party logistics by looking at its quickly expanding network.

"In the last three years, Amazon has built a global end-to-end logistics network that comprises of their own internal last-mile network, their own trucks, their own trains, their own planes, their own truck brokerage, and their own air and ocean freight forwarding," Shanker said.

"Even Amazon, as big as they are and growing as fast as they are, will not be able to fill up this network on day one," he added. "So similar to what they did with AWS, we think it's very logical for them to improve the utilization of their network and lower their own costs by opening up to third parties."

These moves are quick, too. Amazon's air-cargo network, which launched only in late 2015, already consists of 40 Boeing 767s, with 10 more to deliver this year and in 2020.

Morgan Stanley analysts said Amazon could scale to 100 planes by 2025. It services more than 20 domestic locations, and three more Amazon Air gateways are underway to launch this year in Ohio, Illinois, and Texas.

After three years of being in air cargo, Amazon already has 760 cargo flights a week, according to Wulfraat.

"This is not a small network," Shanker said. "We believe that today Amazon can bring a box from China to my door entirely on their own network if they wanted to."

These moves don't indicate that UPS or FedEx should be fearful for their businesses anytime soon. Both offer logistics services far beyond moving products from factory to fulfillment center to doorstep.

"We don't make comments about other companies' business strategies or decisions regarding UPS's services," a UPS spokesperson said. "We are confident in our strategies and believe there is tremendous opportunity for continued business-to-business (B2B) and business-to-consumer (B2C) growth."

UPS, for instance, provides logistics solutions for a slew of industries: high-security defense, complicated automotive manufacturing, and healthcare — even processes like liquid-nitrogen dry-vapor shipping of medicine.

Amazon's moves in logistics lines up with how it launched Amazon Web Services, the company's cloud-computing solution, which is now the leader in a $175.8 billion market. "They're copying the AWS model for logistics and supply chain," Ladd told Business Insider.

It's two different businesses," Helane Becker, the Cowen managing director and senior research analyst, previously told Business Insider. "What FedEx and UPS does is not the same thing that Amazon is doing."

Read more: UPS CEO David Abney has finally said he sees Amazon as a competitor.
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Removing the link per request..

Last edited by whalesurfer; 03-05-2019 at 10:02 PM.
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