Amazon has leased 20 cargo planes for air delivery in a deal announced Wednesday with Air Transport Services Group.
"These planes provide critical capacity expansion to support the growth of Prime in the U.S.,”
spokeswoman Kelly Cheeseman said, according to USA Today. “Planes provide an additional dedicated transportation method connecting Earth’s largest selection to customers from coast to coast. At our scale, supporting growth requires adding some of our own logistics capabilities."
USA Today called the agreement “long-awaited and much-rumored” as the Seattle online retailer has grown.
Air Transport Services Group of Ohio said in a statement that it has been working on the deal since last summer. ATSG will lease 20 Boeing 767 freighter aircraft to Amazon Fulfillment Service and provide operation and logistics services for five to seven years.
“We offer Earth’s largest selection, great prices and ultra-fast delivery promises to a growing group of Prime members and we’re excited to supplement our existing delivery network with a great new provider, ATSG, by adding 20 planes to ensure air cargo capacity to support one- and two-day delivery for customers,” Amazon's senior vice president Dave Clark said in the statement.
Amazon currently uses United Parcel Service and
FedEx services for its deliveries, Reuters reported. The deal, which will go into effect April 1, is expected to have little effect on UPS and FedEx, which maintain air fleets of 240 planes and 370 planes, respectively.
The agreement also extends Amazon the right to buy as much as 19.9 percent of ATSG’s stock over the next five years at $9.73 per share.
"It gives you a sense of the scale at which they are operating and the scale at which the plan on operating in the future,"
ITG analyst Steven Weinstein said, according to Bloomberg Business. "To take on something this ambitious really requires a great deal of confidence that you are going to be moving significant volumes for a long period of time."
Michael Pachter, an analyst at Wedbush Securities Inc., called the move a “baby step” toward having its own delivery fleet.
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