Amazon adds Airplanes to its Transportation

Amazon's third annual Prime Day has a new piece to its shipping puzzle: airplanes.

Standing in front a Boeing 767 fitted for freight and emblazoned in blue and white branding including the Prime swish logo, Dave Clark, Amazon's senior vice president of worldwide operations and customer service, said the fleet of 24 planes allows Amazon to fly to cargo hubs, but also from "point to point." Sixteen planes will be added by mid-2018.

"These planes are predominantly focused on our two-day network. So, it allows us to make the shipping cut-off later, so you can order later and later and still get that in the two-day promise with our own air network." Clark said. 

Clark estimated that the direct option can shave 12 to 15 hours off of a cross-country journey - a crucial reduction when the turnaround is a tight 48 hours or less.

For Amazon, bringing more transportation capabilities in-house could help rein in ballooning shipping costs - a metric it only just recently began breaking out in quarterly earnings. In the first quarter, worldwide shipping revenue grew 37 percent year on year to $2.5 billion; worldwide shipping costs grew 34 percent to $4.4 billion. It could also help give the company famous for its fixation on customer service more control, after delivery misses by UPS and FedEx during Christmas seasons past.

As for Prime Air, the next few days will prove to be the fledgling fleet's biggest delivery test yet - and one coming as some pilots look to negotiate their union contracts with the lessors.

As for UPS, FedEx and the Postal Service, they all insist they're ready to deliver for all of their customers this week.

Courtesy: CNBC

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