Amazon Plans First Air Cargo Hub | Hacker News Reader

Amazon Plans First Air Cargo Hub

wsj.com

78 pointsprostoalex85 comments

Good choice on CVG. I live in cincinnati and ever since they started signing exclusivity deals with delta, service options have declined, forcing other airlines out, leaving a biggly(largely) vacant airfield.

Wasn't Cincinnati the alternate choice for hub by Fred Smith and colleagues at the founding of FedEx?

If my memory is good on the subject, I think it was because CVG was a much bigger Delta hub at the time that it was hard for them to turn it into a shipping hub and not disrupt passenger traffic.

Now that Delta has vastly scaled back operations at CVG... time's right.

I found a response from essentially the horse's mouth #1:

"So, there were about three candidate locations, Memphis and, as I recall, Cincinnati and Kansas City. The Memphis airport had some old WWII hangers next to the runway that FedEx could use for the sort center, aircraft maintenance, and HQ office space. Deal done -- it was Memphis. That's how the decision was really made."

#1 https://news.ycombinator.com/item?id=9282104

It wasn't so much that as it is really the only decent choice...

Louisville International Airport (SDF, formerly Standiford Field) is practically ran by UPS and Bluegrass Airport (LEX) is too small for the kind of volume they want to put through and the runways are too short for the size of planes they want to land there (and though they've tried time and time again, they can't expand Bluegrass Airport because the land owners around and Versailles road). Memphis International (MEM) is further from the "center" so to speak and less desirable thusly, but it too is already pretty much ran by FedEx (and is currently the heaviest trafficked shipping airport in the US)...

There were talks for many many years about a central Kentucky airport on the land the Blue Grass Army Depot is on after it would have been decommissioned by the incineration of the nerve gas on site (or now, destroyed via supercritical oxygenation via water), but the army has been dragging their feet (as they wanted to just burn it, but Craig Williams and the Berea and Richmond community put our feet down and said "Hell no, honor your commitment to safely dispose of the material.")... Now it is starting to look like the Army may never actually decommission the depot as they're starting to ship more old munitions in (safer ones, like plastic explosives and not deadly poison nerve gas) to be destroyed via the Bechtel chemical disposal plant.

Kentucky is sort of the "shipping nexus" of the United States being closest to the center of the country while still having access to the I-75 interstate shipping corridor and cheap land for building warehouses on. Amazon really could not pick a better location than CVG at this time...

CVG's downfall wasn't so much when Delta made it a hub, but rather when after Delta's merger with Northwest the hubs were reshuffled [1][2], and CVG lost out hard to the gain of Detroit.

In the acquisition, Delta gained Minneapolis, Detroit, and Memphis as hubs, while previously having Atlanta, CVG, and Salt Lake City. CVG was midway between Atlanta and Detroit. Detroit is closer to Europe, slightly closer to most of the big cities on the Eastern Seaboard, and slightly closer to Minneapolis, while also having a larger local market and a hub-friendly terminal design.

Now CVG's luck turns because the same geographic attributes that made it unremarkable vs. Detroit are very handy once you're no longer in the air. Kentucky is well-positioned between the populous midwest and the few crossings of the Appalachians. It's no accident that UPS operates out of Louisville and Fedex (after Memphis) out of Indianapolis, and former DHL's, and most of Amazon's contract fleet out of Clinton County just to the east. This triangle is well-connected by trucking both for destinations near or far.

[1] http://web.archive.org/web/20150121014513/http://www.ajc.com... [2] http://www.dispatch.com/content/stories/business/2009/08/09/...

Could mean that they want to coorporate with DHL to some degree? DHL doesn't have a big network within the US, but they do have a lot of capacity Asia->US. So perhaps they'll use DHL to get goods to the US and use their cargo planes/fleets from there. That way they have to pay less to DHL and don't have to build up capacity to ship Asia->US as well.

Guess makes sense for both parties, DHL doesn't lose out (they didn't deliver for Amazon anyway) and Amazon can focus replacing what they pay most for, getting goods from import to the customer.

OT: For what it's worth, the "web" link to do a google search of the article no longer brings up search results that show the whole article.

It did for me.

If I click over from the search with uBlock enabled (in Firefox), I can't read the article.

If I then turn uBlock off, go back and click over again, I can read the article.

This isn't very surprising when people are giving conflicting reports about whether they can view some link. Hopefully everyone on the site that runs an adblocker sees my comment and stops whining about WSJ links (hah!).

Me too, here's the AMP link, curious if someone clicking to get the WSJ subscribe page or the full page when they access it from HN instead of directly from the Google search results:

https://www.google.com/amp/www.wsj.com/amp/articles/amazon-c...

Forbes alternative: http://www.forbes.com/sites/stevebanker/2017/02/01/amazon-pl...

I'd take WSJ over Forbes. At least WSJ doesn't host drive-by malware.

But I can actually read Forbes without payment, meaning WSJ might as well not exist as I do not intend to pay for news.

I think they understand that, but is stating they prefer no-malware & no news over malware & free news.

Thanks for downvoting me pointlessly.

The search result still opened a paywalled article but the link from "News" tab on search results worked.

If you're using Chrome, this extension should get around paywalled articles: https://chrome.google.com/webstore/detail/xray/dgkdfehohjdbm...

Gold. Worked perfectly.

I like Amazon. But, wow, sure does seem like some serious vertical integration.

This was inevitable. Shipping stuff with a third party is incredibly expensive. You're essentially paying for their logistics and channels. Amazon has more than enough money and data to build this themselves, and doing so will save them a significant amount over time

UPS and FedEx don't really seem to be printing money. I would think that Amazon tends to be one of their worst customers (margin wise).

Obviously Amazon still benefits if they can capture some of that margin (and probably from being able to specialize to themselves and find efficiencies there), but is it a huge opportunity or is it just a worthwhile place to optimize their business?

I don't think this is Amazon's current plan, but removing a large revenue stream from other shipping companies and then growing their own shipping operation on their captive business could end up driving one or more of the current incumbents either out of business or, more likely, to merge. With less competition, overall shipping rates rise, magnifying Amazon's advantage, and possibly allowing them to offer their infrastructure as a general service. Voila, another profit center. This is kind of where Amazon's cloud services came from.

That AWS was built on Amazon's existing internal infrastructure is mostly apocryphal. However they do offer order fulfillment as a service (you can have Amazon ship and handle returns for products sold on your own webstore). What you describe seems more like that to me

I agree they are bad margin wise but it is also a solid predictable (and large) amount of money. They can make more money on other smaller shippers. The large amount of revenue allows them better reach (routes/drivers) for all their customers. If Amazon drops UPS, how many jobs do they need to cut? They may have a lot more routes/drivers that make much smaller margins or (worse yet) lose money until they reallocate the work by cutting some.

I think Amazon's play (while financial) is also about control. If all shippers start charging more, they have to eat it. If they control it, they know their margins at all times and can adjust things. Also, this makes it much more likely for them to switch to a completely gig economy based model which could reduce costs in a way that UPS could likely never match, even internally.

Anecdotal , but I heard from UPS employees that they essentially break even on their ground network, and essentially all their profit comes from airmail. FDX might do slightly better on their ground, given they pay their drivers < 1/2 of what UPS pays.

Interestingly, if Amazon scales back on UPS and FedEx as they ramp up their own logistics, this would leave both companies with a lot of excess capacity and infrastructure to maintain unless there is equivalent growth from the rest of the market. Given how much Amazon ships, that a big potential problem. It also gives Amazon even more leverage with both shipping companies when it does need to use them.

I'm curious if this eventually could create market problems like we are seeing with excess shipping capacity. The World Container Index hit a 5 year low this past year due to excess capacity.

I'm thinking network capacity is easy to sell off / write-off in domestic shipping, isn't it ? Trucks and trailers are "consumables" (not sure what the proper econ term is), UPS could just stop buying new trucks for a while (not the case with cargo jets though, those will burn a hole in anyone's pocket).

I think where it counts is the "last mile", similar to the cost of telecom. But I dont see that many package car drivers being laid off, since the demand is "inelastic". The driver still needs to cruise the neighborhood whether 1 guy or 100 guys are getting packages. If UPS's volume gets cut by 20%, there's no way they're going to need to cut 20% of their drivers.

What I predict amazon will do is just have delivery stations. I would gladly drive a mile or two to pick up my stuff from an automated locker, versus contend with some of the tricks that I hear about so much with at-home delivery (that I'm thankful has never happened to me).

If you eliminated the "last mile" package cars, all you'd need is hubs (which UPS is well on their way to fully automating for pkg sorting), long-haul drivers/pilots, and a few delivery drivers to load up the "automated lockers" in each neighborhood.

Re: world container index, I'm assuming that includes marine shipping, which should be independent of amazons network?

They actually do print money but most of it is spent on OpEx. They are basically airline, trucking and shipping companies, and all of those things are $$$$$$$

It's not that UPS and FedEx are too expensive, it's that Amazon ships so much stuff that the carriers don't have enough capacity. And when they start demanding that Amazon help them expand their capacity (by raising rates?), it becomes cheaper for Amazon to build some capacity themselves.

It seems unlikely if UPS & FedEx have trouble serving all of Amazon's needs that Amazon themselves are going to build out capacity to replace all their use of UPS & FedEx's.

In the build-vs.-buy decision analysis: I always considered they'd explore buying UPS since they have a 4x market cap. Why build from scratch when you can acquihire a logistics company with lots of experience and global reach? Sure there's always merging pains of integration, but it seems faster than just rediscovering hundreds of years of operational experience (and yes idiosyncrasies / bad habits / inefficiencies too).

Edit: Amazon may not have enough cash to buy UPS, and would rather build what it needs, when it needs it.

People think of Amazon as an e-commerce company but Amazon has quietly become a logistics company on an incredible scale.

Hundreds of warehouses around the world. Amazon Logistics handling a growing portion of their package deliveries, meaning hundreds of delivery stations. Amazon Flex (crowdsourced contractors) handling much of that delivery as well. Thousands of shipping containers/trailers, dozens of airplanes, apparently a boat or two to move stuff from China. In India, many small stores now have all the local packages delivered there, and the store owner handles last-mile delivery to customers.

25+% year over year growth means that they are at a scale where any savings is worth millions or billions. It also means that if they don't vertically integrate, they'll have to depend on other companies scaling at the same rate.

(I spent 5 years writing software in their logistics division. Kind of miss it sometimes.)

Well as long as they ditch USPS I'll be happy. I really want to support the idea of a federal postal service, but it consistently sucks in comparison to UPS.

Comparing US Postal Service to UPS is not fair. USPS doesn't have all the flexibility that UPS has with regards to price and whom they will service. The US Postal service has to pickup and deliver mail to all Americans, UPS doesn't.

People don't complain about USPS because they suck at delivering to my "island" home in the middle of a swamp. They complain about USPS because somehow they seem to get a lot of employees who just don't try.

In my experience, Fedex and UPS deliver when they say they will. USPS "attempts" deliver all the time only for the package to fail to arrive. I live in the urban part of a small city/big town. There is essentially never a reason a package can't be delivered.

My latest gripe concerns the USPS person that delivers my daily mail. She loves to catch me outside and let me know that she doesn't "legally" have to deliver my mail if there is snow on my steps. I live in New England. Everyone has fucking snow on their steps.

I live in New England too, back when I lived in a suburb the first thing we did when it snowed (and even while it snowed) was clear a path and the steps for deliveries. I could understand not being home a few times to clear them, but I also know I wouldn't want risk walking on snow covered steps if I could avoid it...

Snow can and will cover up ice. That makes walking those steps inherently dangerous. She's being a bit of a jerk about it, but really she just wants her safety to be assured.

"Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds"

(Written above the postal HQ in Manhatta)

What about broken hips?

Ive had this issue to.. I live in RI. In 2013 there were a bunch of huge snow storms and my roommates and I were lazy college kids and dont go the extra mile shoveling out the front of the house where the mailbox was. We dint get mail for a month, until the post office told us that we had mail waiting at their location.

She walks up and down snow covered steps all day every winter. She can't do her job if she slips and injures herself. The policy makes good sense.

Huh? Where does UPS not ship to? I'm pretty sure they ship everywhere.

I am confident UPS does not ship to certain countries where they have no presence. No web sources at the moment, but heard this from my shipment broker.

edit: and they charge more for hard to reach places. really.

Yeah, I think only DHL services North Korea for example.

USPS could do a few things to improve and they really aren't that big. For the following examples consider this: I live on a "no outlet" road. Meaning 100% of traffic is for the 20 houses on the street and not through traffic. And of the local traffic it is extremely minimal, we have more kids playing on the street than we have cars.

1) Stop being lazy. For example, I ordered something from Amazon and even though I have Prime, I paid for next day delivery. It was something I really needed. I rushed home that day excited to finish a project. Looking out the window I watched the USPS guy drive right past my house. A short while later I got a notice from Amazon that my package wasn't delivered due to an obstruction blocking my mailbox. I go out to the mailbox and look around trying to figure out what the obstruction was. The only thing I could figure out that would be possibly considered an obstruction was the trash cans I had just taken out that were about 5 feet to the left of the mailbox.

2) Consider somethings could possibly be fragile and take that into account when handling. For example, earlier this week I had 2 "large" flat envelopes delivered that were clearly way too large for my mailbox. Instead of considering that the contents may be fragile the USPS guy just jammed the envelopes into the mailbox the best he could making them into a crumpled mess.

Your #1 is my main complaint. I live at the end of a long gravel driveway which is admittedly not always in the best of shape, especially in the winter. UPS (and other non-USPS) carriers still have no choice but to come down the driveway. USPS will often do things like hang boxes of the mailbox (where they've been stolen from time to time) or jam them into the mailbox. (The situation has gotten somewhat better since I got a huge mailbox that can accommodate most packages.)

It's not about laziness. Fedex and UP ruthlessly measures the efficiency of their drivers by timing their every single activity. This information is displayed in real-time to managers back at the warehouse, who can see, for instance, if a particular delivery is taking longer than average.

This is why many drivers game the system by skipping deliveries that they think will take too long, or (for packages that require signature) wait for only ~5 seconds after knocking on the door before deciding that you must not be home.

Wouldn't that then imply that you would get worse service from Fedex and UPS, where the drivers have more to gain by cutting corners? But the reality is really the exact opposite.

I don't know what the criterion is for not leaving a package, but it typically seems that UPS or FedEx will leave a package whereas USPS will not. Even for trivial, cheap packages like a roll of posters, USPS will leave a dreaded pink slip requiring me to visit the post office. While I have had that happen with UPS, those incidents are few and far in between. For me leaving the package is often the difference between getting it or not.

I will say, I usually work from home if I'm expecting something important and that UPS often does not seem to knock or if they do they've hired the world's quietest knockers. Perhaps they think I'm not home since I have a concealed driveway and just don't bother, but it definitely seems their high expectations do have some drawbacks.

If UPS does not meet it's promise, sometimes the paying customer is reimbursed ( first hand experience with Farnell delivering to me, while speaking with UPS service personnel ).

It's highly dependent on where you live and the individual driver assigned to your route.

I used to absolutely wonder in confusion why people complained about the USPS - where I grew up it was always cheaper and generally more reliable than UPS or Fedex. Plus if you ever had to go into the Post Office the people were downright pleasant and competent.

Then I moved to Chicago, and I instantly realized the reputation was deserved. It was essentially two entirely different postal systems, you would simply not recognize them as the same "company".

UPS and Fedex I've both had utterly fail for me living in different locations, just lazy worthless drivers happened to be assigned to me.

I will say all the complaining about "leaving packages to get stolen" needs to stop - if you're concerned get a box to put them in. Otherwise it's not reasonable to have these guys wait on you to come to to door. Sure it's only 30 seconds, but that's 30 seconds multiplied by 200 each day. Sure there will be some shrink just like a retail store, but it's still overall much more efficient.

My USPS drivers are so shiftless I have no reason to believe they would put packages in a box if I had one. They have left boxes on the driveway in the rain even though there is a covered porch a few feet away. I routinely get my neighbors' mail. USPS is so bad that I do everything I can to not receive mail.

> Otherwise it's not reasonable to have these guys wait on you to come to to door. Sure it's only 30 seconds, but that's 30 seconds multiplied by 200 each day

The only place I've had packages left outside is in the US. In every other country, every package that doesn't fit in the mailbox requires you to come to the door (or in many cases, it will require you to pick it up at a local postal pickup point, usually a nearby supermarket/convenience store/gas station)

> even though I have Prime, I paid for next day delivery

I thought the entire point of Prime was that it was next day delivery?

Prime is and started as 2 day delivery. Some items have "next day" or even "same day" included now, but not most.

Huh I get next-day included on every Prime purchase I make and always have done. If I order something at 11pm at night it's usually at my door by around 10am the next day. That's on standard Prime, and I don't live in a major metropolitan area.

Prime would be a pretty poor deal if I had to wait two days for anything to turn up!

Weird, i've never seen that. Wonder if it is due to your proximity to a Amazon center or something.

Fwiw, i (not OP) still feel 2 day is plenty fast and i get my moneys worth. Ordering 2 day on non-Prime items reminds me how expensive that crap is normally.

Here are the shipping benefits:

* FREE Two-Day Shipping on eligible items to addresses in the contiguous U.S. and other shipping benefits. For more information, go to Amazon Prime Shipping Benefits. * FREE Same-Day Delivery in eligible zip codes. For more information, go to Order with Prime FREE Same-Day Delivery.

I'm guessing you live in an eligible zip code?

https://www.amazon.com/gp/help/customer/display.html?nodeId=...

No I don't, but I do live in the UK. I think the whole country is eligible for one-day delivery here.

https://www.amazon.co.uk/gp/help/customer/display.html?nodeI...

I still think two-day delivery is pretty rubbish. The great thing about Amazon Prime is it's faster than finding time to go to the shops and pick it up. If I have to wait literally days for it to arrive it's not the case any more.

Yeah this is all attributable to the relative size/shipping distances involved in the UK vs. the US.

1-day shipping in the U.S. outside of major metro areas is basically impossible at that $100 price point (or whatever Prime is these days). 2 days is pretty remarkable when you really think about it.

Call your local USPS office tell them you are going to file a formal complaint/grievance to Amazon about the delivery. The driver can get reprimanded for it. Amazon Prime deliveries are not a joke to them.

Source: both my parents just retired from the USPS.

My limited experiences with the USPS have been quite positive. The two times I've called to inquire about packages they routed first to the manager and then to the actual postman who delivers my mail. He remembered details about my building's entrance like the location of a small basket, and explained where the mail in question had been left.

I ordered an item from Amazon and was initially happy that it was being sent USPS. I live in an apartment building without a doorman. UPS and FedEx can't get inside the building but USPS has a key in order to get into the lobby with the mailboxes. But somehow the package delivery arm of the USPS is different from the ordinary mail delivery arm and I got a notification that they couldn't deliver the package.

Something like having agreements with all the landlords to get keys to all the buildings is a major advantage that the USPS has over its rivals. It should take advantage of that.

Two suggestions.

Tip your mailman. Not 20 or 50 but 100 or more.

Put a deck box for parcels by your mailbox.[1]

1 https://www.amazon.com/gp/aw/d/B0030GG2GC/ref=mp_s_a_1_8?ie=...

Letter carriers can tell you the amount each patron gave each year. Year after year.

Edit: also your phone number is in the Amazon shipping label. With friendly customers I text if there is a delivery problem.

I mostly agree. I would actually pay UPS a monthly fee to takeover my mail delivery if it were an option.

Do you live in a city? In my (albeit very anecdotal) experience, folks in cities HATE the USPS, while in the suburbs they seem to be great. I live in Philadelphia but work in a small suburb just across the bridge in New Jersey, and it's like night and day. I absolutely hate dealing with USPS in the city. Service is slow, they are miserable, say they leave packages when they don't. They "attempt" delivery so I ALWAYS have to go to the post office to pick up my packages (which takes usually an hour or two of my time). Then you have to worry about things like packages being stolen. But in the suburbs it's the complete opposite. The woman (it's always the same woman) at the post office is super friendly, very nice, service is fast, there's never a long line.

Incidentally, I have the exact same experience with liquor stores in PA (which are state run).

My small town post office is actually great but I tried to go to one in Pittsburgh and wanted to off myself. So inefficient and slow. The employees clearly hate their jobs but know they can do the bare minimum and not be fired.

Same is true of my local DMV vs the regional one.

I live on a mountain half a mile up an unpaved road (there are a half dozen or so houses on the road, not just us).

UPS will drive to our door. Fedex will drive halfway up and leave packages by the side of the road (there is a gate and a turnaround there.)

USPS won't even bother putting packages on the delivery truck; instead I need to drive 15 minutes to the post office to pick them up. The most infuriating thing is that when they put a slip in our mailbox, it generates a "Sorry we missed you, delivery attempted" email which is utter and clear BS.

This might be a relatively extreme situation, but they have also sucked in the prior suburban and urban places I've lived.

Will Amazon eventually buy one of these carriers? Or maybe start their own thing?

From the article, it seems clear they want to start their own thing. "Amazon’s goal is to eventually haul and deliver packages for itself as well as other retailers and consumers—making it a direct competitor with UPS and FedEx, according to people familiar with the matter. "

The question is will they pay their drivers and sorting facility workers as much as UPS and FedEx. A UPS driver makes $25-$30 which isn't a bad gig, and FedEx pays around the same. Even a part time sorting job is a pretty good job for a college student.

It'd be interesting if they took over one of the carriers they've contracted with (ATI or Atlas). The company is vehemently against organized labor, yet both companies have unionized pilot groups.

Seems like an interesting story, too bad I cannot read it even after trying the google search workaround.

http://archive.is/miR4p should work

You can use this Chrome extension: https://chrome.google.com/webstore/detail/xray/dgkdfehohjdbm...

You can google the title to bypass the paywall.

Two things: there's a link (labelled "web") for that right under the title on this page, it's a built-in HN feature. It doesn't work very well, at least not for me on this story (and the last couple of tries I did for, say, the past month).

Also, the title could do well with adding "In Kentucky" or something, to be less click-baity. Perhaps that's enough to make it not worth clicking, for many.

Didn't know about that feature. The bypass worked for me, but maybe that's because I don't really use it all that often.

If you know how in a way that actually works, I'm all ears. WSJ seems to rarely, if ever, work for me googling the titles these days.

Just tried and worked for me via Google. I have noticed previously that you need to click on the link, not right clicking to open it in a new window/tab. You might also need to make sure your browser is sending the Referrer and you don't have a privacy extension or similar extension / Do Not Track blocking it.

(This time I tested was on mobile and clicking on the AMP link in Chrome Android, but I haven't had problems with it myself on desktop beyond the new-tab issue.)

Try turning off your adblocker for WSJ.

Tried accessing it via incognito - that didn't work either

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