To control delivery chain, Amazon may lease planes

Amazon.com Inc is considering leasing 20 Boeing Co 767 freighter jets to help gain more control over its delivery methods and costs, according to a person familiar with the plans.

The tech-savvy retailer is interested in building up its cargo operations as consumers increasingly order online, especially during the holiday shopping season. Controlling its own planes and crew would help Amazon shave time and money getting goods to customers' doorsteps, and help keep its warehouses stocked with inventory. Amazon has run into delays when the shippers it depends on now, United Parcel Service Inc and FedEx Corp. have struggled to keep up with the large and erratic orders around Christmas.

The Seattle Times reported that Amazon is testing its own service on a limited basis and will decide early next year whether to proceed.

The move could eventually pose a threat to FedEx and UPS, the world's largest package delivery service, though Amazon would be starting with a small number of planes and it could take years to expand the operation to the point of having an impact on the two shipping leaders.

Seattle-based Amazon ships about 5.2 million packages a day during the peak holiday period, estimated Satish Jindel, a logistics consultant in Sewickley, Pennsylvania. About 70 per cent will go through the US Postal Service, 15 per cent through UPS, 10 per cent through FedEx and the remainder through smaller delivery companies, he said.

Yet Amazon has a reputation for moving quickly when its trials show signs of working. The one-hour delivery service Prime Now grew from a test in a few Manhattan zip codes to a service in 16 cities around the country in less than a year with restaurant deliveries also being added.

The online retailer sets the standard for fast, inexpensive delivery in e-commerce and Chief Executive Officer Jeff Bezos has spent billions of dollars creating a network of warehouses and shipping hubs in 69 cities. The company is also buying thousands of its own Amazon-branded truck trailers to help speed shipping.