Amazon Expanding Shipping Capacity With $1.5B Air Cargo Hub Reducing Reliance On FedEx, UPS

Prime Air Boeing
Amazon is the undisputed leader in online retail, with the company offering customers access to just about any product imaginable under the sun. Many of those products can be delivered to your house within a few hours’ time, or at most two days, if you subscribe to the $99/year Amazon Prime subscription service.

Needless to say, Americans’ penchant for ordering anything and everything from Amazon means that the company also burns a lot of cash to pay shippers like FedEx, UPS and the US Postal Service (USPS). So, what is a company like Amazon to do?

For starters, the company is looking to build an air cargo hub at the Cincinnati/Northern Kentucky Airport, which is located in Hebron, Kentucky. This hub would lessen Amazon’s reliance on FedEx and UPS, both of which have humungous hubs in Louisville, Kentucky that are tasked with processing an enormous number of Amazon packages on a daily basis. The new hub has the potential to employ upwards of 2,000 people.

As we reported back in August, Amazon [at the time] had leased 11 of a planned total 40 Boeing 767-300 aircraft to ferry merchandise around the country; that fleet has now increased to 16. Not only does this move allow Amazon to move shipping logistics in-house, but it allows the company to more easily add capacity during peak shopping periods to ensure that Prime one-day and two-day shipping targets are met for customers.

In addition, Amazon has its own network of 4,000 long-haul trucks to aid its shipping network. Add that to the thousands of local “everyday drivers” that it employs to make Prime Now deliveries in large metropolitan areas around the country, and you can see how Amazon is looking to enjoy huge cost savings, while at the same time [potentially] robbing UPS and FedEx of a lucrative revenue stream.