Amazon announced the day after Christmas that it delivered an astounding 1 billion packages over the holiday "free."
The complicated logistics network that allows Amazon to move goods from factory to ship to unload docks to train the truck to meet the vans center to your doorstep is anything but free.
Amazon's worldwide shipping costs have grown fifteenfold from 2009 to 2018. Net sales have increased by sevenfold at the same time.
"Amazon is doing everything to keep its shipping costs low because it is balloon," said Marc Wulfraat, president and founder of supply chain consultancy MWPVL International, to Business Insider.
A strategy to keep shipping costs low, according to Amazon CFO Brian Olsavsky, is moving more and more of the company's freight instead of relying on third parties such as UPS, FedEx or USPS. He said on a recent investor call that Amazon can move its own packages more accurately and cheaper.
Read more: It becomes clearer than ever that Amazon is developing a third-party logistics service to cut out FedEx and UPS now that Stamps.com has dumped USPS
"We have good third-party logistics "Party partners in the transport area," says Olsavsky. "What we like about our ability to participate in transport is that many times we can do it at the same cost or better, and we also like the cost profile of it."
But many industry experts point to another motivation for Amazon's sudden build-up of branded Amazon aircraft, trucks and vans, as well as its ever-growing network of fulfillment centers.
I Instead of just looking at shrinking the shipping cost, the Business Insider told Amazon to add another company to its roster: shipping and shipping, Amazon declared a carrier in its latest SEC filing and rolling out a third party freight service for sellers on their website.
"In fact, Amazon has always been a logistics and supply chain company," Michael Zakkour, vice president of global digital commerce and new retail at Tompkins International, told Business Insider. "The biggest trick that Jeff Bezos has ever drawn makes people think he wants to create the entire store. Bezos has focused on investment in logistics and technology."
& # 39; This is not a small network & # 39;
Morgan Stanley analyst Ravi Shanker said it is clear that Amazon wants to break into third-party logistics by looking at the fast-growing network.
"Over the past three years, Amazon has built a global end-to-end logistics network consisting of its own internal cargo environment network, own trucks, own trains, own aircraft, own trucking brokerage, and their own air and sea freight forwarding, said Shanker.
"Even Amazon, as big as they are and growing as fast as they are, won't be able to fill this network on day one," he added. "So, as they did with AWS, we think It is very logical for them to improve the utilization of the network and reduce their own costs by opening up to third parties. "
These traits are also fast. Amazon's aviation network, which was first launched in late 2015, already consists of 40 Boeing 767s, with 10 more to deliver this year and 2020.
Morgan Sta Nley analysts said Amazon could scale to 100 aircraft by 2025. It earns more than 20 domestic locations, and three other Amazon Air gateways are underway to launch this year in Ohio, Illinois and Texas.
After three years of flying, Amazon already has 760 freight aircraft a week, according to Wulfraat.
"This is not a small network," Shanker said. "We believe that today Amazon can bring a box from China to the door entirely on its own network if they wanted to."
These moves do not indicate that UPS or FedEx should be afraid of their businesses at any time soon. Both offer logistics services far beyond moving products from factory to fulfillment center to doorstep.
"We do not comment on other business strategies or decisions on UPS services," said a UPS spokesperson. "We are confident in our strategies and believe there is tremendous opportunity for continued growth from business to business (B2B) and business (B2C)."
For example, UPS offers logistics solutions for a number of industries: security defense, complex car manufacturing and healthcare – even processes such as liquid nitrogen-nitrogen gas delivery of medicine.
Amazon's movements in the logistics lines go up with how it launched Amazon Web Services, the company's cloud computing solution, now in the lead of a $ 175.8 billion market. "They are copying the AWS logistics and supply chain model," Ladd told Business Insider.
There are two different companies, "Helane Becker, CEO of Cowen and senior research analyst, told former Business Insider." What FedEx and UPS do is not the same as Amazon does. "
Read more: UPS CEO David Abney has finally said he sees Amazon as a competitor
Moreover, Amazon's 50 aircraft – or even the potential for up to 100 by 2025 – are not entirely up to the 550-plus plane that UPS owns or rents or FedEx's fleet of 678. And while Seattle-based e-commerce has 760 flights per week, UPS has 16,100, according to a UPS spokesperson.
And some analysts like Bernstein's David Vernon Doubts That Customers Want To Use Amazon Air He Wrote That The Airport To The Airport, Amazon Air Is Cheaper Than UPS Or FedEx Due To Lower Salaries From Amazon Air Pilots, But FedEx And UPS Are Even More Cost-Effective Door-To-Door.  "It is reasonable to conclude that this service is not a replacement cement for a FedEx of UPS network, or it is a viable commercial option for third-party vendors," Vernon wrote in an analyst note in December 2018.
Amazon go Not a come
From cloud computing to logistics
While the Amazon logistics offering is still lean compared to the massive global network such as UPS and FedEx, former Amazon expert Brittain Ladd, now an independent supply chain consultant, made clear that Amazon is actually put on the launch of a third party logistics service.
Amazon's move in the logistics lines reveals how it launched Amazon Web Services, the company's cloud computing solution, now leading a market of $ 175.8 billion. "They are copying the AWS logistics and supply chain model," Ladd told Business Insider.
AWS began as an internal platform in 2002, and two years later, Amazon opened it to the public. It was officially launched in 2006.
From these roots as an internal platform, AWS is now larger than the four major competitors combined – although deep, established technology companies such as Microsoft, Google, Alibaba and IBM. It offers blockchain to machine learning satellites for customers such as Kellogg, Singapore, and Spotify.  Read more: Amazon Web Services supports the technology of a $ 1 billion driverless trucking startup – and it shows how Amazon wants to control its supply chain and cut its $ 28 billion shipping bill
To Be Ready, Amazon launched AWS when the industry began to explode. In FedEx and UPS, Amazon is facing two mature competitors who currently have far more in the way of planes, trains and cars, not to mention a developed logistics offering that helps myriad industries keep their goods safe, temperature-controlled and timely.
But Ladd is not the only industry insider to see similarities between Amazon's logistics movements and the AWS playbook. Morgan Stanley's Shanker and Stamps.com CEO Ken McBride, who told investors last month that the Amazon's infant's logistics network is better than the 227-year-old US postal service, has said the same.
"Amazon will just enter a category or acquire a business that they know they can scale," Ladd said. "When it comes to home delivery, in terms of contract commercial logistics, Amazon not only knows that it can get into those categories, but they scale these categories and do a better job than UPS and FedEx can."