Amazon (NASDAQ:AMZN) has strategically invested in its fulfillment network over the last five years, leasing planes, buying trucks and vans, and contracting pilots and drivers for deliveries. For the most part, Amazon has built its network to operate synergistically with its third-party delivery partners like UPS (NYSE:UPS). But the tech titan’s sending a message that that’s about to change.
The superhub is coming
Amazon announced plans for an air hub at Cincinnati/Northern Kentucky International Airport (CVG) in 2017. It broke ground in 2019, and it’ll start moving packages around the country later this year.
The hub at CVG will operate similar to UPS’ hub in nearby Louisville. Amazon will route much of its air traffic through CVG, moving millions of packages in and out of the airport every day.
The air hub will enable Amazon to use its warehouse and shipping capacity more efficiently. If it can move items from a warehouse on one side of the country to a customer’s doorstep on the other side of the country in one day, it doesn’t have to rebalance inventory across its warehouses to keep items close to customers. That will also help it expand its one-day shipping benefit for Prime customers to more items.
Opening the hub at CVG and ramping up its capacity will dramatically reduce its reliance on third-party shipping partners like UPS. Amazon