E-tailer amazon.com, Inc. (NASDAQ:AMZN) took a major step toward building out its air distribution network by disclosing yesterday it has begun constructing a regional hub at Fort Worth Alliance Airport in Texas.
The project, expected to be completed in late 2019, is significant in that it will be Amazon’s first regional air facility, and will be the first the company will build from scratch. It may also take on added significance because of the vast logistics ecosystem of which the airport is a part.
Situated on 26,000 acres, the “Alliance Global Logistics Hub” includes an intermodal complex operated by western railroad BNSF Railway, rail lines run by BNSF and its western rival Union Pacific Corp., (NYSE:UNP) and an interstate highway, I-35W.
Seattle-based Amazon declined comment on how or whether it plans to leverage the complex’s multi-modal infrastructure to support its air operations. In a statement, it said the hub will be dedicated to the air network’s “larger-scale” regional service. The facility will also have package sortation capabilities, Amazon said.
The facility will handle daily flights, through the number is undetermined. Tom Harris, president of Alliance Air/Aviation Services, a subsidiary of Hillwood Properties, a development firm which built the airport and owns sizable tracts of land surrounding it, said the volume of frequencies will ramp up over time. He called the Amazon facility “substantial in size,” but could not comment on its size or its cost.
The Amazon air network, known as “Amazon Air,” operates out of more than 20 U.S. air gateways. The company is building a $1.5 billion primary air hub in Cincinnati. It recently announced that it would launch gateway operations at the Wilmington, Ohio air park once owned and operated by German carrier DHL Express, and said last week it would expand its operations at Rockford International Airport in northern Illinois.
Amazon leases 40 Boeing 767 (NYSE:BA) freighters that are operated exclusively for it by Atlas Air Worldwide Holdings (NASDAQ: AAWW) and Air Transport Services Group. (NASDAQ: ATSG).
The Cincinnati hub, expected to be partially open in 2020, can accommodate up to 100 freighters when fully operational. Given Amazon’s surges in volume—its traffic is growing by an estimated 20 percent a quarter—and the demanding fulfillment requirements for its “Prime” service, it is likely to need many more aircraft.
For either an annual or monthly fee, Prime members receive unlimited two-day deliveries of most products on Amazon’s website, as well as a myriad of ancillary services. As of mid-year, Prime had 101 million subscribers, according to Amazon data.
Opened in 1989, Alliance touts itself as a 100 percent industrial airport. The city of Ft. Worth owns the airport. Hillwood was founded and is still run by Ross Perot Jr. It has been involved in numerous Amazon construction projects nationwide.
According to an industry source, Amazon hired away executives from UPS Inc. (NYSE:UPS) to design and implement its air network. Perhaps unsurprisingly, the source said, the contours of the Amazon system resemble the UPS air network, namely a global air hub in Louisville, Ky. spoked by regional hubs in Philadelphia, Ontario, Calif. and Rockford, supplemented by an international gateway in Miami. Memphis-based FedEx Corp. (NYSE:FDX) uses Alliance for a regional hub operation.