Amazon launches air cargo network

The rumours have been true – Amazon has been looking at setting up its own air cargo network. The Air Transport Services Group (ATSG) has announced that it is to operate an air cargo network to serve Amazon customers in the United States.

ATSG will lease 20 Boeing 767 freighter aircraft to Amazon Fulfilment Services and these leases are scheduled to last five to seven years, while the aircraft will be operated for five years. The aircraft are to be operated by ATSG’s two airlines, ABX Air and Air Transport International, while ATSG’s LGSTX Services will operate the gateway and logistics side of the contract.

ATSG president and CEO Joe Hete said: “Since last summer, we have been working closely with Amazon to demonstrate that a dedicated, fully customized air cargo network can be a strong supplement to existing transportation and distribution resources.”

Amazon worldwide operations and customer service senior vice president Dave Clark said: “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 will take equity in ATSG, by granting the online giant warrants to acquire up to 19.9% of its common shares at USD $9.73 a share. These can be purchased over a five year period.

Rumours have been rife on the internet of Amazon testing air freight in the US and across Europe. Amazon never commented on the subject but as ever, the first it does is when the deal is signed and sealed. The company has had difficulties with UPS and FedEx air cargo over the years and taking operations in house should ensure that these problems are dealt with internally.