Amazon, which has moved forward aggressively in recent years to take control of its retail distribution chain, this week announced plans for a $1.5 billion Prime Air cargo hub in Kentucky. Amazon already employs more than 10,000 people at 11 fulfillment centers in the state. The company received about $40 million in government incentives to base its new air cargo hub at the Cincinnati/Northern Kentucky Airport in Hebron, which will add an additional 2,000 jobs to the local economy.
My own feeling on Amazon bringing some of it's transportation logistics internally is of skepticism. For many reason but mainly the fact that you now begin to absorb all the variables of doing that. Labor costs, fuel costs, maintenance and so on. I am sure Amazon did some very lucrative deals with UPS and Fedex as well as USPS. These were most likely locked in rates with predictable expenditures. If you look at many companies who make or provide a product that requires transportation for shipping. They have abandoned private fleets for outside sources. This is also why Amazon will fail at drone delivery as a transportation means. Because you have to meet regulations, buy equipment, hire pilots, support staff and pay for liability insurance. I am sure Jeff Bezo and Amazon corporate is obsessed with being independent. Their obvious selling point with internal transportation is eliminating the middle man. However, they seem to over look the advantage of that middle man absorbing all the pitfalls of transportation. Obviously nobody at Amazon is familiar with those issues. Amazon's real problem is they over promise benefits and charge too little for them. Prime members take advantage of two day shipping even if they don't need it. Amazon can only streamline that part of retail online by combining orders, raising membership costs or creating incentives for members to use cheaper shipping options. Creating your own shipping system won't solve the cost problems that are affecting profits.
Amazon to Build $1.5B Prime Air Cargo Hub in Kentucky
Posted by: David Jones February 4, 2017 10:40 AMAmazon, which has moved forward aggressively in recent years to take control of its retail distribution chain, this week announced plans for a $1.5 billion Prime Air cargo hub in Kentucky. Amazon already employs more than 10,000 people at 11 fulfillment centers in the state. The company received about $40 million in government incentives to base its new air cargo hub at the Cincinnati/Northern Kentucky Airport in Hebron, which will add an additional 2,000 jobs to the local economy.