There is speculation that Amazon is interested in developing a presence at Frankfurt-Hahn airport as it expands its logistics activities in Europe or even in acquiring the loss-making German airport which is up for sale.
According to a recent report in German newspaper Sueddeutsche Zeitung, Amazon has held talks with the Frankfurt-Hahn Airport authority although it was unclear exactly what had been the subject of the discussions. The newspaper speculated that Hahn would be a reasonable location for a hub for Amazon, located in the middle of Europe and close to its logistics centre in Koblenz.
When contacted by CEP-Research neither Amazon Germany nor Frankfurt-Hahn immediately returned a request for comment. The former US military airport about 120km west of Frankfurt is best-known as Ryanair’s largest base in Germany and has also tried to establish itself as a strategically located air cargo hub.
Speaking previously to freight industry website Lloyd's Loading List, a spokesperson for Frankfurt-Hahn said that reports that Amazon was planning to set up a base at the airport or even potentially acquire it were “all rumours.” She confirmed that Hahn Airport is in a process of being sold but said the responsibility for that was with its owner, the German federal state of Rhineland-Palatinate.
She added that as negotiations with the bidders were still on-going, the owner would not comment at the moment on any details about the potential investors but noted that according to rumours, there were three bidders, each of them coming from China. “But since we are excluded from the selling-process, we cannot comment on that.”
The airport spokeswoman said that the speculation linking Amazon with Hahn began at the end of February – probably stimulated by the airport’s sale process and Amazon’s well-publicised plan to acquire control of its own fleet of aircraft in the US.
Nevertheless, she commented that Frankfurt-Hahn Airport “would offer several benefits for a company like Amazon”, including its location in the middle of Germany, and – “unlike its larger competitors” – the airport’s “quite simple and therefore quick logistics processes”, with short distances from landside to airside. “Plus, the airport is qualified with CAT3 and able to handle large cargo aircrafts up to code F aircrafts. Nevertheless, we did not see any ‘official’ interest from Amazon – it’s all rumours…”
As reported by CEP-Research in recent months, Amazon is expanding its logistics activities in Germany at present. It is investing in its warehouses, including €1.2 million at its Leipzig facility, is building up a same-day delivery operation in major cities in partnership with local couriers and is reportedly planning to introduce Amazon Lockers in competition to DHL’s Packstations.
More generally, speculation on just how deep Amazon is planning to go in logistics has gained momentum over the past few months.
In the USA, a tie-up was announced last month with aircraft leasing and air cargo transportation provider, Air Transport Services Group (ATSG) Inc., to operate an air cargo network to serve Amazon customers there. The commercial agreements include the leasing of 20 Boeing 767 freighter aircraft to Amazon Fulfillment Services, Inc. by ATSG’s Cargo Aircraft Management (CAM), the operation of the aircraft by ATSG’s airlines, ABX Air and Air Transport International, and gateway and logistics services provided by ATSG’s LGSTX Services.
In conjunction with the commercial agreements, ATSG also has agreed to grant Amazon warrants to acquire over a five-year period up to 19.9% of ATSG’s capital. News of the tie-up bore out US media reports before last Christmas which claimed Amazon was trialling its own flights out of Wilmington Air Park in Ohio and was negotiating to lease 20 B767 freighters – the cornerstone of a project to develop its own cargo operation to avoid delays from the integrators who have struggled to keep up with the rapid growth of e-commerce.
In Europe, CEP-Research reported at the start of this year that Amazon had chartered a B737 before Christmas which carried out six times weekly flights between mainland Europe and the UK. But it was unclear whether this was a move to test out its own air operation or simply the provision of extra capacity in the run-up to the festive break.
Asked whether Amazon had plans to look after its own air logistics in Europe, a UK-based company spokesperson quoted a brief statement which said: “Within our European fulfilment network, we use various carriers with a range of transport methods for distributing and delivering items. This includes air.”
In January this year, there was further speculation about Amazon's logistics expansion with the news that during 2015 it had registered its Chinese subsidiary, Beijing Century Joyo Courier Service, as a freight forwarder with China's transport ministry, obtaining a license to ship cargo out of the country. Beijing Century Joyo Courier Service made a similar application with the US Federal Maritime Commission (CFMC) last November, the trade names ‘Amazon China,’ ‘Amazon.cn’ and ‘Amazon Global Logistics China’ being listed on its license. Amazon is also believed to have filed an application with the Shanghai Shipping Exchange to serve as a shipping broker for 12 trade routes, including Shanghai to Los Angeles and Shanghai to Hamburg, Germany.
However, there has been very little official comment from Amazon on where its logistics intentions lie. At an Amazon earnings call in February 2016, CFO Brian Olsavsky appeared to play down the significance of the reports that the company was planning to operate its own fleet of aircraft. He explained that Amazon was not planning to replace delivery partners but merely supplement the capacity provided by them during peak periods for shipments such as Christmas.
But Bloomberg News brought to light a 2013 report to Amazon’s senior management team which reveals that the Amazon logistics ambitions appear to be far weightier. It says the report proposes "an aggressive global expansion of the company’s Fulfillment By Amazon (FBA) service", which provides storage, packing and shipping for independent merchants selling products on the company’s website.
"The report envisioned a global delivery network that controls the flow of goods from factories in China and India to customer doorsteps in Atlanta, New York and London. The project, called Dragon Boat, is proceeding, according to a person familiar with the initiative, who asked not to be identified because the information isn’t public," Bloomberg underlined.
