Investors in the transportation sector are facing a sea of change thanks to the rise of online commerce. A major part of that change is Amazon.com, and the firms move towards using in-house transportation portends of more evolution to come. With thousands of shipments daily, Amazon.com is leading the way in creating its own in-house transportation via airplanes. This could potentially pave a path for other online retailers, as well as for the future development of other devices like drones which threaten companies that may not have the available funds to invest in them.
More and more buyers are purchasing items, partly because of Amazon’s renowned shipping turnaround times. Today, consumers in cities can have items delivered in an hour, for others, one or two-day shipping is available for a small fee. Amazon is using all of its resources to deliver to their customers utilizing FedEx, UPS, and the U.S. Postal Service. Jeff Bezos, Amazon’s Chief Executive Officer, however, noted in a conference that Amazon is taking up all the shipping capacity that those services are giving them. Amazon is not trying to run them out of business, but simply adding to their network and growing it – this in turn means that Amazon is cutting an important source of future growth potential for the shippers.
Amazon is growing by leasing 20 Boeing 767s from Air Transport Services Group, said a recent BloombergBusinessweek article. Amazon has launched a new delivery service called Prime Air, allowing it to ship even more goods to its customers. Prime Air isn’t flying in and out of any major airports just yet: they’re quietly using Wilmington Air Park in Wilmington, Ohio.
With the launch of Prime Air, Amazon will now be able to process larger shipments of goods on their own. There is no longer the strain and stress on the Christmas-time rush for speedy deliveries for customers by using external shipping companies. Happy customers mean a greater number of deliveries, more merchandise, and increases in sales. Related: Is This The Gas Station Of The Future?
These sales dollars can then progress further research and development into other delivery devices. Fortune writes that Amazon is currently testing personal delivery drones, as well as some other projects. This space will be huge for investors. The possible long-term growth from the company is going to expand even more with the specific future delivery logistics projects.
There is a lot of time and energy being put into these projects. Future works may not necessarily give Amazon a competitive advantage in the marketplace, and it is certainly costly without the guaranteed return. Either way, FedEx and UPS carried a large volume of packages for Amazon, and they will be hurt as well with less business from them. Currently, with Amazon being as creative as it is, they may eventually be a threat to mail carriers. For traditional mail carriers, packages and mail still need to be sent to customers, but with Amazon’s growing inventory - where you can buy just about anything – there could be a cause for concern that they could take over a large portion of the marketplace. Investors in the transportation sector should bear these developments in mind.
By Michael McDonald of Oilprice.com
More Top Reads From Oilprice.com:
- Oil Prices Bounce On OPEC Hopes
- Spike In Grid Failures: The Next Big Headache For Utilities
- Expert Commentary: Traders Turn A Blind Eye To OPEC Rumors