- 2 February 2017
- Apex Insight News
Amazon has begun building a $1.49bn air cargo hub near Cincinnati, Ohio where it plans to schedule more than 200 flight departures and landings a day. While Amazon announced the plans earlier this week it gave few details.
The airport’s manager has spoken to US news media, and this gives new insight into the online giant’s plans to handle shipping in-house, as well as cutting costs and increasing the speed of its US delivery networks. The estimated number of flights is written on the lease term sheet that Amazon and the airport are expected to sign according to Candace McGraw, CEO of Cincinnati / Northern Kentucky International Airport who spoke to NBC this week.
The scale of this project is a strong suggestion Amazon is set to take on FedEx, UPS and DHL according to Marc Wulfraat, President of logistics consultancy MWPVL International. Amazon however has stated that its aircraft leases are designed to supplement as opposed to replace the logistics companies it has been using.
“They’re going to become a full-fledged competitor to UPS,” Wulfraat said. The $1.49 billion investment could have bought Amazon six warehouses, but the e-commerce giant is instead making a longer-term move aimed at lowering shipping costs, he added.
However, Amazon has disclosed that it has leased 40 Boeing 767F freighters to date, sixteen of which it is operating currently. It has however been building operations at smaller airports in the US and in Europe too.
In Cincinnati, Amazon is to lease 372 hectares from the airport. According to McGraw it is building 100 parking spaces for planes.
Amazon would have to contract dozens more planes worth billions of dollars at current list prices to fill its future hub’s parking spaces, and still more if it wants to operate routes that do not include Cincinnati.
The size and term of the deal has convinced McGraw that Amazon’s air cargo business is more than a trial service.
“I have complete confidence they’re all in,” McGraw said. McGraw said she expected to finalise the term sheet with Amazon soon.
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