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Amazon Leases Boeing Jets To Improve Efficiency: Baby Step Toward Own Delivery Fleet?

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Amazon has inked a deal with the Air Transport Service Group (ATSG) to lease 20 Boeing 767 freighters for five to seven years in a bid to boost delivery efficiency and guarantee one- and two-day shipments in the United States.

This move will let the retailer create its own air delivery network, giving it the means to stop depending on third-party shipment services such as UPS and USPS. Moreover, it will potentially save more money this way and prevent late deliveries.

"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," Dave Clark, Amazon senior VP of worldwide operations and customer service, says.

Spending $$$ To Be More Efficient

Amazon spokesperson Kelly Cheeseman tells Business Insider that the Boeing 767 freighters will commence operation on April 1.

ATSG has yet to give out the details of the agreement, but according to the Seattle Times' report back in December 2015, leasing a Boeing 767 for a month will cost about $600,000 to $650,000 or $300,000 to $325,000 for converted freighters, which is what Amazon will likely use.

Based on these figures alone, the company will significantly save a lot more in terms of shipping expenses, which clocked in at $8.7 billion back in 2014.

Other efforts that Amazon is putting into its delivery network include thousands of branded truck trailers and delivery drones with Amazon Prime Air.

Amazon's Own Delivery Fleet

However, that's not all there is in this development. While Amazon will likely become self-sustaining in the delivery department if all goes well, it will also become a direct competitor with logistics service providers, including DHL Worldwide Express and FedEx, to name a few.

"In 20 years, Amazon will have its own delivery fleet. This is a baby step toward that goal," Michael Pachter, an analyst at Wedbush Securities, says.

Amazon has had building an in-house delivery network in mind for a couple of years now. The plan was prompted when the retailer failed to deliver packages on time in Christmas of 2013 because of third-party carriers, offering shipping refunds and credits worth $20. Needless to say, the company intends to never have the incident happen again.

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