Amazon building its own overnight airfreight operation, sources say

Fuel and "Purchased Transportation" (also indexed to fuel costs) are their two largest cost categories.

They pass hedging costs directly via fuel surcharges, which is unrelated to rate hikes.

"Both FedEx and UPS reported that fuel costs were down about 35% from the year earlier in their most recent quarter"

this is driven by the fact that airlines don't consistently have taxable income. If you have net operating losses, which airlines often do, you can't fully take advantage of the tax shield provided by depreciation. Airplanes are big capital assets, hence they provide a large tax shield. That's why you often see financial entities (e.g. banks, insurance companies) who have regular taxable income have leasing arms.

Edit: I stand corrected... Although I still wouldn't be surprised if the execs golf together. :)

By setting up their own distribution networks they control the entire chain from first click to final delivery, and to Amazon that is equally important as cost.

It also allows them innovate in an area that is sorely lacking innovation, all under their control.

This is the lesson of the new economy. You have to control all contact points with the customer. If you don't, you are letting a third party "sell" your brand which never works in your interest.

If I were to guess, I'd say that amelius is saying that it becomes increasingly common as companies grow for them to expand into functions that were originally outside their core function. Framed this way, "selling stuff online" may have once set an effective upper bound on what Amazon does, but now they appear to be expanding into "moving stuff from place to place."

This concept is related to vertical integration.

USPS is beefing up its parcel operations and is getting more competitive. Generally speaking, in my city the post office performs better for most ground scenarios, mostly because they are separating parcel delivery from the standard routes.