Skip to main content
  • Home
  • About
  • Faculty Experts
  • For The Media
  • Videos
  • Topics
    • Alumni
    • Events
    • Faculty
    • Library
    • Research
    • Students
    • All Topics
  • Contact
  • Submit
Business & Economy
  • All News
  • Arts & Culture
  • Business & Economy
  • Campus & Community
  • Health & Society
  • Media, Law & Policy
  • STEM
  • Veterans
  • |
  • Alumni
  • The Peel
  • Athletics
Sections
  • All News
  • Arts & Culture
  • Business & Economy
  • Campus & Community
  • Health & Society
  • Media, Law & Policy
  • STEM
  • Veterans
  • |
  • Alumni
  • The Peel
  • Athletics
  • Home
  • About
  • Faculty Experts
  • For The Media
  • Videos
  • Topics
    • Alumni
    • Events
    • Faculty
    • Library
    • Research
    • Students
    • All Topics
  • Contact
  • Submit
Business & Economy

On Amazon’s New Delivery Service: Don’t be surprised to see some significant shifts in global shipping

Tuesday, February 13, 2018, By Sawyer Kamman
Share
AmazonDelivery ServiceGlobal Shippingsupply chainWhitman School of Management

Burak Kazaz, professor of supply chain management at Syracuse University’s Whitman School of Management reacts to news that Amazon is set to launch a delivery service that would compete with FedEx and UPS.

“In recent years, Amazon decided to develop its own logistic capabilities,” says Kazaz, the Steven Becker Professor of Supply Chain Management. “They built Prime Air and already have forty 767 jumbo airplanes that can move a lot of products, both between their fulfillment centers and to reach their customers. I would not be surprised to see more than one hundred 767 jumbo airplanes in Prime Air at the end of 2018. This is a significant investment in the firm’s logistical capabilities, one that would pose the type of threat mentioned to UPS and Fedex. These giant flying birds, when run efficiently, mean a significant transportation capacity.”

“Let’s talk about Amazon’s initiative on moving parcel for businesses and their newly advertised Shipped with Amazon (SWA)” say Kazaz. “Why would Amazon provide this service? It is important to understand the demand pattern for this online retailer. Quarter 4 is when the company has its highest logistical needs with Thanksgiving, Black Friday, and the holiday season. In the three remaining quarters, this transportation capacity might be at utilization rates less than ideal. SWA fulfills the need to make use of the unused capacity while providing the firm with the ability to serve its customers during high demand season, namely Quarter 4. If pricing reflects this reality, then Amazon’s new initiative sounds like creating efficiency in the utilization of this transportation capacity.”

Kazaz on analyst reports

“I certainly understand the concern that Amazon may not be asset heavy when evaluating its logistics network,” says the professor. “This is in alignment of the traditional perspective in analyzing financials of the transportation companies. However, we also need to be cognizant of the fact that we live in an era of light asset networks being much more valuable nowadays, at least in the way that Wall Street and investors see them. Take Airbnb, which does not own its accommodation facilities, but has the consumer demand and its value is extremely high in the financial market. The reason for the high valuation is that the firm has more leverage by keeping its cash and not making these long-term, and potentially risky, investments.”

“In addition to the transportation capacity in North America, Amazon can serve as a brokerage firm between shipping companies and businesses that need these shipping services. They have the technology who can develop such applications. I would not be surprised if Amazon takes this initiative seriously, and play a significant role in controlling the global shipping capacity,” says Kazaz.

“And, let me add that Amazon may not be the most efficient logistics provider early on with these initiatives. The company has proven to be a quick learner from its experiences as indicated from the missed deliveries in 2013. Given the history, I would not be surprised to see some significant shifts in the playing field with new equilibriums in the transportation services both in the US and in global services.”

Syracuse University faculty are available to speak to media via phone, email, Skype, or LTN studio. Please contact Scott McDowell, executive director, regional strategic communications at semcdowe@syr.edu or 929.351.5887 or Ellen James Mbuqe, director of news and PR at Syracuse University, at ejmbuqe@syr.edu or 315.443.1897.

  • Author
  • Faculty Experts

Sawyer Kamman

  • Burak Kazaz

  • Recent
  • Vice Chancellor Haynie Appointed to Veterans Advisory Committee on Education
    Monday, May 16, 2022, By Austin Philleo
  • Sociologist Shannon Monnat to Lead Maxwell’s Center for Policy Research
    Monday, May 16, 2022, By Jessica Youngman
  • Student Speaker Ghael Fobes Mora Shared Highlights of the Class of 2022
    Monday, May 16, 2022, By News Staff
  • Maxwell Prepared Mike Tirico ’88 for His ‘Most Challenging Assignment’
    Monday, May 16, 2022, By Jessica Youngman
  • Message From Chancellor Kent Syverud
    Monday, May 16, 2022, By News Staff

More In Business & Economy

Rabia Razzaq G’23 Wins 2022 Intelligence++ Inclusive Design Competition

Rabia Razzaq G’23, a multidisciplinary designer and graduate student in the College of Visual and Performing Arts, won the 2022 Intelligence++ Showcase Competition, held in the Whitman School of Management on April 26. The interdisciplinary competition—which encourages design and business…

Whitman School Receives STEM-Designation for Master’s in Professional Accounting Program

The Martin J. Whitman School of Management’s master’s in professional accounting program has received STEM-designation. The class of 2022 will be the first to graduate with this new STEM certification. “We have made notable innovations to our master’s in professional…

Whitman’s Full-Time MBA Program Achieves Highest U.S. News Ranking Since 1998

The Martin J. Whitman School of Management at Syracuse University is now ranked No. 57 in the nation for its full-time MBA program by U.S. News & World Report. This is the highest ranking for the Whitman School since 1998…

Stocks and Finance Immersion Offers A&S | Maxwell Students a Window Into Finance

When Jehan Muhialdain ’22 moved to the United States from Iraq five years ago, one of the major differences she noticed in her new country was the focus put on financial literacy and wealth management. She says living in Iraq,…

Applications Open for RvD iPrize and Hunter Brooks Watson Spirit of Entrepreneurship Competitions

The School of Information Studies (iSchool) with support from the Blackstone LaunchPad at Syracuse University Libraries (LaunchPad) are now accepting applications through March 15 for the Raymond von Dran (RvD) iPrize pitch competition and the Hunter Brooks Watson Spirit of…

Subscribe to SU Today

If you need help with your subscription, contact sunews@syr.edu.

Connect With Us

  • Twitter
  • Facebook
  • Instagram
  • Youtube
  • LinkedIn
Social Media Directory

For the Media

Find an Expert Follow @SyracuseUNews
  • Facebook
  • Instagram
  • Youtube
  • LinkedIn
  • @SyracuseU
  • @SyracuseUNews
  • @SUCampus
  • Social Media Directory
  • Accessibility
  • Privacy
  • Campus Status
  • Syracuse.edu
© 2022 Syracuse University News. All Rights Reserved.