Amazon’s announcement

Yesterday, Amazon (AMZN) announced that it’s partnering with GE Capital Aviation Services (GE) to expand its fleet of domestic air cargo planes. The company will add 15 more converted Boeing (BA) 737-800 planes to its current fleet of five.

The fleet expansion will give Amazon a chance to add more cities to its network. Amazon said that more than 20 airports in the US will be connected with the fleet. By 2021, the company expects to have a fleet of 70 planes to support its one-day delivery program.

From retail to cargo

Over the years, logistics has made Amazon what it is. A key element of Amazon’s logistics chain is cargo operations. So far, Amazon has relied mostly on large companies such as FedEx (FDX) and UPS (UPS). However, things are changing fast.

Amazon is getting aggressive with its one-day delivery program by building its own fleet to control the entire value chain. Recently, Amazon and FedEx parted ways by deciding not to renew their express delivery contract. Amazon’s move to expand its fleet comes with that as a backdrop.

Once the Amazon contract expires, FedEx is expected to pursue other e-commerce companies, including Amazon’s rivals in the US, as the e-commerce war moves to the sky.

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