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Pilot Strike Could Disrupt Amazon’s Holiday Fulfillment

In Digital Age, In-House Transport Network Seeks to Compete With UPS, FedEx
Amazon plane
Amazon plane Dave Schatz

NEW BRUNSWICK, NJ–Amazon.com Inc.’s vital holiday deliveries may be disrupted due to a pilot strike, according to a Wall Street journal report, which cites challenges with the company’s “in-house transportation network.”

On November 23,  a “longstanding labor dispute” heated up as pilots “contracted to deliver Amazon packages began picketing,” says the report, noting that pilots employed by only one of Amazon’s two airline partners, Air Transport Services Group (ATSG) were picketing.

Still, the strike foreshadows “potential disruptions” for the rest of the year, according to the report.

Both ATSG and Atlas Air Worldwide Holdings Inc. are companies under contract “to fly [Amazon’s] packages in 40 dedicated jets by the end of 2018,” states the Journal. And 40% of the jets will be operating by the end of this year, reports the Journal, citing the two companies.

Indeed, Amazon has been building its own transportation network through various collaborations.

But with respect to ATSG and Atlas, the increased demand for pilots is causing tension as they try to work out new labor contracts with upper management.

ABX Air Inc., a unit of ATSG filed a federal complaint on November 23, according to the Journal. Moreover, ABX “said Christmas shopping and deliveries already have been disrupted and could worsen if the labor action continues,” writes the Journal.

It adds: ABX “also filed a request for a temporary restraining order against the unions representing its workers.”

While Atlas did not respond to a request for comment, Amazon says it partners with many carriers and has confidence in its ability to serve all consumers.

Amazon, which is quickly dominating the e-commerce platform itself, decided to be retroactive and hopes to avoid the on-time delivery problems experienced by certain e-commerce retailers, in 2013, during the holiday peak according to reports.

Thus, Amazon has “increased its reliance on the U.S. Postal Service, regional delivery companies, smaller, last-mile delivery companies … as it built out its network of warehouses,” says the Journal.

The report points out that this holiday season will indicate “whether Amazon can lessen its reliance on traditional delivery partners such as United Parcel Service Inc. and FedEx Corp.”

And aside from leasing planes, “Amazon is putting more drivers on the road in [small white] vans branded with its logo,” to handle the overload.

What's more, the e-commerce giant has visions of competing with UPS and FedEx, according to reports.

The company is expected to do as much as $145 billion in revenue this year. Accordingly, in a recent letter to shareholders, Amazon founder and Chief Executive Jeff Bezos indicated the juggernaut should be "an invention machine."

Truly, "Amazon is doing a marvelous job at becoming a bigger and bigger part of daily lives," Trip Miller, of Gullane Capital Partners, told Investor’s Business Daily this month. 

"They want to be a one-stop shop for consumers. [And are] making it less likely customers will switch," to a competitor.