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Old 03-05-2019, 09:43 PM   #1  
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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..


_____

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.
___
Removing the link per request..

Last edited by whalesurfer; 03-05-2019 at 10:02 PM.
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Old 03-05-2019, 09:49 PM   #2  
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I'm sorry, but can we discuss the incredible insensitivity of using the 767 photo in that article? It's not even a week from the crash and this Rachel b**** is displaying an incredible lack of journalistic integrity. What a joke!!!
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Old 03-05-2019, 10:00 PM   #3  
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I'm sorry, but can we discuss the incredible insensitivity of using the 767 photo in that article? It's not even a week from the crash and this Rachel b**** is displaying an incredible lack of journalistic integrity. What a joke!!!
My apologies. I read the article using an iPhone and didn’t see any photos at all?

I went ahead and removed the link..
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Old 03-06-2019, 12:23 AM   #4  
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I'm sorry, but can we discuss the incredible insensitivity of using the 767 photo in that article? It's not even a week from the crash and this Rachel b**** is displaying an incredible lack of journalistic integrity. What a joke!!!
In what way is that insensitive and lacking journalistic integrity? Where is it written that after an accident, images of aircraft of the same type or livery are forbidden to be published for some undetermined period of time?

There are still lots of 767s flying, and a bunch of them are painted that way. Using an image of one of them in a business article is in no way insensitive, disrespectful, lacking journalistic integrity, or anything else.
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Old 03-06-2019, 02:29 AM   #5  
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Cloud computing and domestic (let alone global) logistics networks arenít remotely the same thing.

It would be naive to underestimate Bezos think Amazon couldnít become a threat to the shipping duopoly in the years to come...but let us not go Chicken Little and overestimate their capabilities and reach, either...

http://m.aviationweek.com/commercial...ckage-carriers
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Old 03-06-2019, 02:33 AM   #6  
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Also, hereís part of the Business Insider article that was omitted...

Quote:
Moreover, Amazon's 50 planes - or even its potential for up to 100 by 2025 - doesn't quite stack up to the 550-plus aircraft that UPS owns or leases or FedEx's fleet of 678. And while the Seattle-based e-commerce has 760 flights per week, UPS has 16,100, according to a UPS spokesperson.

And some analysts like Bernstein's David Vernon doubt that customers would want to use Amazon Air. He wrote that airport-to-airport, Amazon Air is cheaper than UPS or FedEx because of Amazon Air pilots' lower salaries. However, FedEx and UPS are still more cost effective door-to-door.

"(I)t is reasonable to conclude that this service is neither a replacement for a FedEx of UPS network nor is it a viable commercial alternative for third party shippers," Vernon wrote in an analyst note in December 2018.

Amazon did not provide a comment.
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Old 03-06-2019, 07:10 PM   #7  
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Originally Posted by whalesurfer View Post
[COLOR="Navy"][i]I know, I know, weíve had plenty of Amazon threads here already.. haha.

Iíve always said that I donít view Amazon as an imminent threat BUT I sure hope our (brown) management takes this future threat seriously.

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

However, heís only 25 so heís got many years ahead
- If so, would he be better off at a cargo airline (purple, brown, someone else?) or a pax airline? (and if so, which one?).
My opinion is that for the next twenty years brown and purple are the best financial bet. If things go pear shaped after that, he can always jump to the cattle haulers. Yes, heís given up seniority, but he will walk away from Brown or purple with an A plan (he wonít be able to collect until 60), a B plan, and the fruits of making more sooner on our pay scales. If he goes directly to the pax haulers, he will never get an A plan, he faces a far higher furlough risk, and he has to wait years until he is senior enough to hold wide body pay. Additionally, if he decides he likes domestic flying more than international, he will never max out the pay scale at a pax hauler.
As you know, forecasts 40 years into the future will be as accurate the weathermanís.
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Old 03-07-2019, 10:25 AM   #8  
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All the "Amazon carriers" have aweful contracts and will and are having extensive difficulties in keeping pilots. None of the carriers come close to work rules of most regionals. The retirement is aweful too. Pax or fed ex ups is the only respectacle airline job!
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Old 03-08-2019, 11:36 AM   #9  
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Amazon is a very forward thinking company. If I were a betting man, I'd place my money on Bezos.

Look at the stock chart for purple right after that Morgan Stanley report came out. You'll notice it nosedived (and UPS to some extent). Wall Street knows where this is heading. Brown and Purple's CEOs can knock the research all they want by stating how large their network is and how insignificant Amazon's business is (for now) compared to the big picture. The reality is they are both feverishly working on their own drone delivery programs and how to control labor costs in the future.

The elephant in the room is artificial intelligence and it's coming to a theater near you. It sounds like science fiction now but it's being developed rapidly. While pilotless aircraft are probably a little ways off, I think you'll see it first in cargo. At the very least, you'll see single pilot operations. Passenger aircraft will likely take longer to adapt until XYZ Drone Airline forms and sells tickets at half the cost due to reduced labor costs. The general public already thinks "planes fly themselves".

If you are interested in this kind of thing, search for Jack Ma (Alibaba) and AI. His point is that technology is not linear. Once this technology is developed it will rapidly take over industries (not just aviation).

IMHO (and gazing deeply into my crystal ball), I don't think pilots have anything to be worried about at least for the next decade or two. But if I were looking at a 40+ year career ahead of me I'd definitely be concerned. It wasn't too long ago when there were five people in the cockpit and now there's two. I don't think a single pilot airliner is too far fetched and would solve the "pilot shortage" issue rather quickly.
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Old 03-08-2019, 11:48 AM   #10  
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Originally Posted by CFI Guy
Look at the stock chart for purple right after that Morgan Stanley report came out. You'll notice it nosedived (and UPS to some extent). Wall Street knows where this is heading.
Wall Street acts even more emotional than a bunch of teenage girls at a Bieber concert, with multiple market movements each year based on nothing more than 'sentiment'...which quickly passes.

15 years ago everybody was betting on Wal-Mart taking over the retail world (with loads of bad press about killing mom 'n pop shops), and today we have citizens and analysts alike who worship Emperor Bezos, who has done more to destroy retail in the last decade than Bentonville ever has.
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