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Air cargo service provider Air Transport Services Group (ATSG) has reached agreement with an affiliated company of on-line retailer Amazon to operate a cargo network serving Amazon’s customers in the U.S. ATSG will lease 20 Boeing 767s to Amazon Fulfillment Services and use its affiliated airlines to operate them.

 


Announced on March 9, the cargo arrangement had been rumored since December when The Seattle Times reported that Amazon was exploring its own delivery operation. The relationship with ATSG allows the retail giant to circumvent and potentially compete against freight giants such as UPS and FedEx Express. In addition to leasing, operating and logistics support agreements, Wilmington, Ohio-based ATSG also agreed to grant Amazon warrants to acquire up to 19.9 percent of its common shares over a five-year period

 


“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,” stated Joe Hete, ATSG president and CEO. “We are excited to serve Amazon customers by providing additional air cargo capacity and logistics support to ensure great shipping speeds for customers.”

 


ATSG’s Cargo Aircraft Management subsidiary will lease the 767s, which will be flown by the company’s subsidiary airlines—ABX Air, a Part 121 cargo airline, and charter carrier Air Transport International. Through its leasing and airline subsidiaries, ATSG claims to be the world’s largest owner and operator of converted 767 freighters. The duration of the 20 leases will be five to seven years, ATSG said.

 


Amazon’s 767 fleet will support one- and two-day deliveries to its customers, said Dave Clark, Amazon senior vice president of worldwide operations and customer service. “We’re excited to supplement our existing delivery network with a great new provider, ATSG,” said Clark.

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