Moving ahead with the plans of air delivery via Amazon Prime Air, the ecommerce behemoth has now cemented plans, to deploy as much as $1.49 billion in the development of a new cargo hub for the same.
This Prime Air cargo hub will be built outside Cincinnati, somewhere in northern Kentucky stated by officials aware of the project. The new hub will ramp up Amazon’s pace in transportation, sorting, and delivery besides accommodating company’s growing fleet of planes.
Prime Air service was launched by the company just last year, coming up as a direct threat to huge courier-delivery companies such as FedEx, DHL among others, for whom the majority of revenues come via air cargo. Amazon’s cargo hub design further projects 900 acres of property which is comparative to the hubs of top cargo airlines. The company has signed up for a 50-year lease contract relating to the hub’s spread.
Analysts commenting on the Amazon’s futuristic objectives said,
We estimate a $400 billion-plus market opportunity for Amazon in delivery, freight forwarding, and contract logistics.
The company has not yet revealed the date of initiation for its hub, though claims to create over 2,000 employment opportunities with the said setup. As of now, the company is managing its deliveries in-house only and does not rely on support from third parties. This is done so as to cut costs and achieve optimal delivery of goods. The new project will supplement the deliveries, with no intentions of replacement.
The location of the hub lies not far from UPS’s major hub, hence placing Amazon close to its top cities for goods transmission. Amazon further said that the last year it would lease 40 Boeing Co 767 planes, 16 of which are currently in service. It will also allow the company’s trucks reach eleven fulfillment centers in the state.
Amazon details its cost structure for the project as follows — $462 million on building and improvements over an unspecified number of years. This also includes $40 million in tax incentives for the company over 10 years, along with pouring average wages including benefits targeted at $26 per hour. Amazon’s new initiative gives a tough competition to 1,220 acres UPS’ hub in Louisville. Moreover, FedEx which has more than 900 acres of land for Memphis hub also comes to the light as a competitor.
The project is said to the largest-ever single investment by any company in Northern Kentucky. Jack Mazurak, communications director for the Kentucky Cabinet for Economic Development further added,
It will change the entire shipping and fulfillment industry.