Amazon packages
Amazon cargo packagesReuters

Amazon wants to build its own logistics network in the US to meet customer demands and reduce dependency on third-party freighter services. The online retailer has partnered with Air Transport Services Group and has leased 20 767 freight aircraft to set-up its own fleet.

The American e-commerce major is leasing the planes for five-to-seven years. Under the agreement, ATSG's Cargo Aircraft Management (Cam) will provide the planes while its other divisions ABX Air and Air Transport International will provide operational assistance to the aircraft and ATSG's LGSTX Services will offer gateway and logistics support to Amazon.

"We offer Earth's largest selection, great prices and ultra-fast delivery promises to a growing group of Prime members, and we're excited to supplement our existing delivery network with a great new provider, ATSG, by adding 20 planes to ensure air cargo capacity to support one and two-day delivery for customers," said Dave Clark, senior vice president of worldwide operations and customer service at Amazon.

With this, the e-commerce major would be able to meet requirements such as same-day delivery or next-day delivery of its US-based customers, especially Prime members. Amazon is said to have more than 54 million Prime members in the US.

Speaking about the partnership, Joe Hete, president and CEO of ATSG said: "Since last summer, we have been working closely with Amazon to demonstrate that a dedicated, fully customized air cargo network can be a strong supplement to existing transportation and distribution resources. We are excited to serve Amazon customers by providing additional air cargo capacity and logistics support to ensure great shipping speeds for customers."

Amazon works with third party logistics companies such as UPS and FedEx. But over the last few months, it had hinted about insourcing part of the logistics business. It has also been investing in logistics and transportation services including trucks and drones. In its annual report to the US Securities and Exchange Commission, the e-tailer not only described itself as a transportation services provider, but also identified that logistics firms were its competitors.

Earlier, Amazon had said that it would build its logistics arm to bring down costs and increase efficiency and raised the minimum price of an order for its free shipping service.