Amazon's Holiday Deliveries Face Turbulence From Pilot Strike
November 22 2016 - 9:20PM
Dow Jones News
Amazon.com Inc.'s newly established in-house transportation
network is facing a rocky start to its all-important holiday
season.
Pilots contracted to deliver Amazon packages began picketing
Tuesday because of a longstanding labor dispute, a sign of further
potential disruptions through the end of the year at one of
Amazon's two airline partners.
The pilots are employed by Air Transport Services Group Inc.,
which alongside Atlas Air Worldwide Holdings Inc., was hired by
Amazon to fly its packages in 40 dedicated jets by the end of 2018.
About 16 will be in operation by the end of the year, according to
the companies.
But the contracts with Amazon, which is beginning to build its
own transportation network through these kinds of partnerships,
have added more flights and staffing needs at ATSG and Atlas. The
increased demand is upsetting pilots as they try to agree on new
labor contracts with management.
In a complaint filed in federal court Tuesday, ABX Air Inc., a
subsidiary of ATSG, said Christmas shopping and deliveries have
already been disrupted and could worsen if the industrial action
continues.It also filed a request for a temporary restraining
order. Atlas declined to comment on whether it was affected by the
ATSG industrial action on Tuesday.
Amazon said it works with a variety of carriers and is
"confident in our ability to serve customers."
This holiday season is the first major test of whether Amazon
can lessen its reliance on traditional delivery partners like
United Parcel Service Inc. and FedEx Corp. In addition to the plane
leasing, Amazon is putting more drivers on the road in vans branded
with its logo to take on huge amounts of additional packages. It
also wants to be a competitor to UPS and FedEx, according to people
familiar with the matter.
Amazon has asked certain last-mile delivery partners to increase
holiday capacity by as much as double in recent weeks—a difficult
ask due to an already tight labor market and shortage of rental
vehicles, according to people familiar with those requests. It is
tied to Amazon's move to consolidate deliveries to the same address
into one vehicle, known as "Project Zero", instead of routing them
through several different carriers.
"It's unrealistic to ask you to double your capacity at a week's
notice," said an executive at one of those companies.
Amazon said that there hasn't been a recent shift in its holiday
forecasts or capacity needs.
Amazon determined that it needed to take its destiny into its
own hands after holiday delivery problems in 2013, when bad weather
followed by a flurry of last-minute online orders at retailers
caused millions of packages to arrive after Christmas.
Since then, it has increased its reliance on the U.S. Postal
Service, regional delivery companies and smaller, last-mile
delivery companies, as well as its own citizen courier fleet of
Flex drivers, as it built out its network of warehouses. Amazon
started a trial in September last year with ATSG, initially leasing
five Boeing Co. 767 freighter jets to link its distribution centers
through the airline's Wilmington, Ohio, hub.
However, Amazon also walked into longstanding labor disputes
over pay and working conditions at some cargo airlines, though both
ATSG and Atlas said they have had no problem recruiting extra
pilots.
ABX's legal filing said that the Tuesday action caused the
cancellation of 26 flights and stranded more than 1.25 million
pounds of cargo for its other major customer, Deutsche Post AG's
DHL.
If more flights are canceled due to the action, it "will result
in millions of dollars of freight and packages not timely being
delivered to retailers and homes," the complaint said.
Aside from ATSG's base in Ohio, the jets are operating up to
eight daily flights for Amazon from airports that include the
online-retail giant's Seattle base, Stockton and Ontario in
California, Rockford, Ill., Lehigh Valley Airport in Allentown,
Pa., and Tampa, Fla.., according to people familiar with the
network.
Write to Laura Stevens at laura.stevens@wsj.com and Doug Cameron
at doug.cameron@wsj.com
(END) Dow Jones Newswires
November 22, 2016 21:05 ET (02:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
FedEx (NYSE:FDX)
Historical Stock Chart
From Aug 2024 to Sep 2024
FedEx (NYSE:FDX)
Historical Stock Chart
From Sep 2023 to Sep 2024