Morgan Stanley: Watch out FedEx/UPS - Air Amazon will eat you up
MORGAN STANLEY investment bank says Amazon's new air network poses a serious threat to the volumes of FedEx and UPS, reports London's Air Cargo News
MORGAN STANLEY investment bank says Amazon's new air network poses a serious threat to the volumes of FedEx and UPS, reports London's Air Cargo News.
The bank analyst report said the US$1.5 billion air hub it is building at Cincinnati/Northern Kentucky Airport hub will have space for 100 aircraft.
'We estimate that Amazon Air's all-in cost to be $6 [per package] vs $8/$10 for UPS andf FedEx Air. We estimate in 2019, this savings per package translates to a savings of $1 billion to $2 billion or 3-6 per cent of Amazon's global shipping costs,' said the report.
'In 2Q18, we tracked 3,980 Amazon Air flights with 27 of its 40 plane fleet in the air,' said Morgan Stanley.'
'This is an average of nearly 50 flights per day or two per operating plane. At launch, Amazon Air was announced as a purely domestic US operation.
Analysts have questioned UPS and FedEx in the past whether they are concerned about Amazon's expansion. In response, FedEx dismissed reports as fantastical.
Even with 27 planes in service for Amazon, the e-commerce giant has the capacity to ship as much as 25 per cent of its own North American packages, said the report.