"The Champagne should probably be kept on ice, at least until the two presidents put pen to paper," said state-owned media China Daily.Traderead more
U.S. stock index futures turned lower after China said it needed to have further discussions before it would sign off on the so-called phase one trade deal President Trump...US Marketsread more
Analysts say the partial U.S.-China trade deal doesn't touch on thorny issues plaguing both sides, and warn talks could break down again.World Economyread more
Economists polled by Reuters had expected Chinese exports denominated in the U.S. dollar to fall by 3% and imports to decline by 5.2% in September, compared to a year ago.China Economyread more
Economists Abhijit Banerjee, Esther Duflo and Michael Kremer won the 2019 Nobel Economics Prize for their work in fighting global poverty, the Royal Swedish Academy of...World Newsread more
Boeing's board removed CEO Dennis Muilenburg as chairman amid the fall out of two 737 Max crashes that killed 346 people.Aerospace & Defenseread more
The U.K. and EU are gearing up for what could be the busiest week in British politics since June 2016.Europe Politicsread more
The U.S. had plans to hike duties on at least $250 billion in Chinese goods to 30% from 25% on Tuesday. Despite the partial trade deal, some banks on Sunday wrote that tariff...Marketsread more
"It seems like what the two leaders have done is try to set some of the thorny political issues to the side," said Dhruva Jaishankar, director of the U.S. Initiative at the...Asia Politicsread more
Beijing will be opening up its financial industry to foreign ownership from January, namely in the areas of futures, mutual funds and securities.China Economyread more
The industry has pulled in $322 billion over the past six months, the fastest pace since the second half of 2008.Marketsread more
Amazon is becoming a player in the logistics and shipping industry.
That's what analysts think about the recent expansion of Amazon Air to include 50 planes and several new regional hubs, including a $1.5 billion hub opening in northern Kentucky in 2021.
According to Wolfe Research, the e-commerce giant is now handling its own shipping for 26 percent of online orders. In a December press release, Amazon said that it can "transport hundreds of thousands of packages per day" with its new "dedicated air network" and that its fleet of planes make "two-day shipping possible almost anywhere in the U.S."
"Amazon is looking to become a logistics company in their own right," said Ravi Shanker, Morgan Stanley's North American transportation analyst. "We think that Amazon will be a top logistics provider, whether it's in trucking or in air, in the coming years. I think the question is just how quickly they will ramp that operation."
Amazon is even acknowledging the importance of this business to investors: In its 2018 annual financial filing released earlier this month, it listed "transportation and logistics services" among its group of competitors for the first time.
Amazon's shipping costs jumped 23 percent last quarter, reaching a record $9 billion. It spent $27 billion on shipping in 2018. The more of these steps Amazon can control itself, the more it can control the costs.
"We estimate that Amazon will pay about $6 a box to move this themselves on their own air network," said Morgan Stanley's Shanker. "Versus what we estimate Amazon paying UPS and FedEx: about $8 or $9 per box today ... and given Amazon's scale, that could be a couple of billion dollars at least in savings."
By bringing shipping in-house, Amazon also has more control over the speed of deliveries.
"Amazon's going to do more of its business in-house and they're going to just outsource the costly operations that they don't want to build capacity for, they're going to outsource it to carriers like UPS and FedEx," said Tarek Abdallah, assistant professor of operations at Northwestern University's Kellogg School of Management. "By gaining more control over their supply chain, they can make sure to provide a better service because if a customer does not receive his package on time, they're not going to blame UPS or FedEx, they're going to blame Amazon."
"If they could shave any cent out of this delivery route, this can be passed out to their sellers. And this means that their sellers could offer their products at a cheaper cost. And that gives them a huge advantage in this online e-commerce space," Abdallah said.
Amazon Air currently has planes at 21 U.S. airports and it's opening new regional hubs this year in Fort Worth, Texas, Wilmington, Ohio, and expanding one in Rockford, Illinois.
Amazon will open a $1.5 billion air hub at Cincinnati/Northern Kentucky International Airport in 2021. There it will have capacity for 100 planes — double the number in its fleet now — and will plan to schedule 200 flight landings and departures each day.
One bustling Amazon Air operation is at Ontario International Airport in Southern California. It recently dethroned Atlanta as the country's No. 1 airport for outgoing cargo.
"We have about eight flights a day on Prime Air," said Ontario International Airport Deputy Executive Director Atif Elkadi. "I know when they started here a couple of years ago it was maybe three or four flights a day and it has steadily increased."
Some of the Amazon aircraft CNBC saw at Ontario International are repainted with blue Prime branding, while others still carry logos of the airlines Amazon leases the planes from: Atlas Air, ABX Air and air cargo conglomerate Air Transport Services Group.
Once Amazon packages are offloaded from Amazon planes, they're sorted on site at the Ontario airport, loaded onto Amazon semitrucks and sent out to one of its 185 fulfillment centers. Amazon Air has gotten so busy in the region that it recently opened a new center at March Air Reserve Base in Moreno Valley, just 30 miles from Ontario International.
Amazon is not just bulking up in the air — it's taking on the ground as well.
Amazon, UPS and FedEx all rely on the U.S. Postal Service for the especially difficult and expensive job of taking packages from fulfillment centers to individual doorsteps.
That's why Amazon ordered 20,000 vans last year and has begun testing more advanced delivery methods like Scout sidewalk robots. In Los Angeles and London, it's testing out a program called Shipping With Amazon. Sellers who've used the service say Amazon offers shipping rates at half the price of UPS.
As its own shipping capacity goes up, Amazon's reliance on FedEx, UPS and the U.S. Postal Service drops. That spells trouble for these partner organizations.
"If Amazon Air did not exist at all, we reckon that UPS and FedEx revenues would be about two percent higher than they are today," Shanker said.
But FedEx's senior vice president of integrated marketing, Patrick Fitzgerald, said he's not worried at all.
"We honestly don't see a world where Amazon would be a competitor to FedEx," Fitzgerald said, because, "there is no sensible way to compare them."
"You can carve out some local delivery in highly dense markets. That's in no way a competitive threat to the broad portfolio of business that FedEx does."
Fitzgerald pointed out that FedEx has 700 planes, while Amazon only has 40.
"In a given week, Amazon flies 671 flights. The FedEx number of flights per week is closer to 13,000," Fitzgerald said. "Amazon is a revolutionary e-commerce company, but that doesn't mean that Amazon can just suddenly decide to become competitive with FedEx in transportation."
Even losing Amazon's business wouldn't be that big a deal for FedEx, Fitzgerald said.
"Amazon is a longtime customer of ours. We're proud of the partnership, but they're not our largest customer. We actually recently specified that they represent less than 1.3 percent of our total revenue for 2018." Fitzgerald said. "For our competitors, the percentage of revenue from Amazon is significantly higher."
While FedEx said it's not worried, Amazon itself seems to be worried about how these partners think about the relationship. When Amazon heard CNBC contacted UPS, FedEx and the U.S. Postal Service, it pulled out of a scheduled interview for this story.
In a written statement, Amazon said: "We are very happy to have the delivery capacity our carrier partners can provide. They provide a high quality service, and our own delivery efforts are needed to supplement that capacity rather than replace it."
Northwestern's Abdallah said Amazon is being cautious about revealing its ambitions.
"Without logistics, Amazon would not exist. So it's very important for them to maintain close relationships with their third party logistics," Abdallah said.
He added: "The next big thing in e-commerce is who figures out how to do this one-hour delivery or same-day delivery. This is very expensive, but whoever figures it out first will get a huge advantage in this market."