Amazon.com Inc, the ecommerce and online retailer giant, has revealed ambitious plans to open its own air cargo hub tentatively at Cincinnati in Northern Kentucky Airport at Hebron.
The air cargo hub is part of the company’s eventual plan to haul and deliver its own packages without having to depend on conventional logistic companies.
Additionally, Amazon intends to be a hauler and deliverer for other retailers as well, a direct competition for two of the largest such companies, UPS and FedEx.
This move is expected to create over 2,000 jobs while reducing its dependence of traditional cargo carriers including FedEx and UPS both of which have large hubs close by.
In 2015, the company reported plans to having 20 cargo planes out of which 16 planes are already part of the company’s fleet. Amazon’s newly acquired 4,000 semi-trailers is an attempt to improve its trucking capacity. The company also has a dedicated set of Flex drivers who make deliveries for Amazon in major metro areas.
The air cargo hub plan closely follows Amazon’s recent debut into sea carriers wherein it directly handled shipment of its goods from China to its US warehouses. This activity was formerly managed by third-party freight transport companies.
The CEO of the Northern Kentucky Tri-County Economic Development Corporation, Dan Tobergte said that this ambitious requires about $1.5 billion in investments and over 2 million square feet of space. He said that he is trying to get Amazon a $40 million incentive for this project.
The hub will include an area to park cargo planes, multiple buildings, and other equipment for material handling.
Analysts opine that Amazon’s planned investment could lead to more incoming resources to build and strengthen infrastructure in air-cargo logistics. Analysts also said that Amazon could end up being a strong contender in the freight and logistics industry especially when it starts hauling and shipping deliveries and packages for third parties.
Despite the optimism, the current strength of Amazon transport network is very small compared to traditional carriers like FedEx and UPS.
To put this in perspective, UPS biggest air cargo hub is located in Louisville, Kentucky’s Worldport and this hub employs almost 10, 000 people. UPS’ Louisville 5.2 million square feet hub is capacitated to handle and sort 416,000 packages and parcels an hour. Moreover, UPS’ air fleet consists of over 500 air cargo planes.
Hence, analysts are of the opinion that the short-term goal of Amazon is to be ready to manage its own packages without having to depend on traditional carriers especially during busy and peak times such as holidays.
Amazon’s choice of location also will make it a neighbor to DHL which is a presently one of the main providers of international shipment services to the ecommerce behemoth. DHL has a large hub at Cincinnati and could potentially facilitate shipment transfers between planes which would further decrease Amazon’s dependence on FedEx and UPS.
Currently Amazon already has 11 fulfillment centers in Kentucky. Transportation analysts also viewed the location choice positively as they believed that the chosen place is only a two-day drive for most of the population in the US.