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Amazon.com Inc. announced Wednesday that it is ordering 20,000 Mercedes-Benz vans from Daimler AG as part of a larger plan to expand its delivery fleet and that small businesses have an oversupply of packages.
In June, the online retail giant said it would for the first time let entrepreneurs create delivery companies employing up to 100 drivers and renting between 20 and 40 pickup trucks sporting the Amazon logo.
Amazon aims to manage more of its own deliveries to keep pace with its rapid growth, reducing its dependence on companies such as FedEx Corp. and US Postal Postal.
Based on his order, Amazon indicates that at least 500 delivery companies should enroll in the program initially. A spokeswoman said that Amazon has received "tens of thousands" of applications for the program and is still evaluating them.
The company will not own any trucks. Instead, it will distribute them to the fleet management companies that will buy the vehicles and lease them to smaller delivery service providers.
Amazon has long relied on FedEx, United Parcel Service Inc. and the postal service to handle most of its deliveries.
But as his online orders grew at a faster rate than the capacity of these companies, he began developing his own transportation network. Amazon now collects nearly half of every dollar spent online in the United States.
Amazon sees this new initiative as a way to better control costs and deliver packages on the "last mile", which is usually the most expensive part of an online trip. In building this network, he relied on a subcontractor model, employing small businesses that own vans to make deliveries.
Amazon is expecting to compete with the giants of delivery someday, but the road ahead is long because the 20,000 new vans represent a fraction of the size of the fleet of bigger players. On its website, UPS claims to own approximately 119,000 cars, vans, tractors and motorcycles. FedEx says its ground handling, which also uses a contractor model, has more than 60,000 vehicles, while its Express division has more than 100,000 vehicles.
FedEx also owns and leases approximately 670 aircraft, while UPS owns approximately 245 and rents another 320 aircraft. Amazon has already stated that it has the option to lease approximately 40 aircraft.
Amazon announced Wednesday the news at a joint press conference with Mercedes-Benz at the opening of the automaker's new plant in North Charleston, S.C.
Write to Laura Stevens at [email protected]
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