Amazon ‘in talks over Hahn Airport base’
Will Waters | Thursday, 14 April 2016
Internet retailer has reportedly held discussions with the central German airport, with speculation it is considering an offer to buy it
Although reports last month suggested that Amazon’s primary focus in Germany currently is to find a new location for a major distribution centre, there is now speculation that it may be one of three parties interested in acquiring Hahn airport.
No one at the airport was available to comment at the time of writing, but a report in German newspaper Sueddeutsche Zeitung indicated that discussions with Amazon had taken place, although it was unclear exactly what had been the subject of the discussions.
It said the loss-making airport was for sale, noting that the Rheinland-Pfalz regional authorities had received three purchase bids. Although the names of bidders are not named, it said the contract would be signed soon.
Sueddeutsche Zeitung 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.
The speculation comes as Amazon attempts to enhance its presence within Europe's largest economy and expand its own delivery operation in Germany following a launch in Munich last year. The delivery operation is set to be extended to other major German cities and metropolitan districts, reducing reliance on the big parcel carriers, a report in DVZ claimed, quoting the managing director of transport at Amazon Germany.
Last week, the courier, express and parcels information service CEP-Research reported that Amazon planned to invest €1.2 million in its logistics facility in Leipzig, which is celebrating its 10th anniversary this year, to keep up with other, more modern logistics sites, including new conveyor technology and more staff.
As reported in Lloyd’s Loading List, Amazon last winter trialed an air express operation in Europe, chartering a B737 freighter to fly packages between Poland, the UK and Germany. The plane reportedly made five trips a week, flying from Katowice in Poland to Luton, East Midlands, or Doncaster airports in the UK and then back to Poland via Kassel in Germany.
The round trips linked several of Amazon’s biggest fulfilment centres in Europe. Katowice airport is near its two giant warehouses in Wroclaw, while Kassel is the closest airport to Amazon’s two fulfilment centres in Bad Hersfeld, Germany.
In March, Amazon confirmed that its logistics ambitions lie beyond local warehousing and distribution by signing a series of agreements with Air Transport Services Group (ATSG) to operate an air freight network on behalf of the internet retail giant. After much speculation about the relationship between the two companies, ATSG announced the agreements with Amazon Fulfillment Services, an affiliate of Amazon.com, “to operate an air cargo network to serve Amazon customers in the United States”. 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 common shares.
The commercial agreements will include the leasing of 20 Boeing 767 freighter aircraft to Amazon Fulfillment Services by ATSG’s Cargo Aircraft Management (CAM) business; 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. The duration of the 20 aircraft leases will be five to seven years, while the agreement covering operation of the aircraft will be for five years, ATSG said.
As reported by Lloyd’s Loading List, Amazon began a trial late last year with ATSG involving Amazon moving further into logistics via its own-controlled air freight and air express delivery operations. Sources in the US had reported that Amazon was the customer of a new air freight operation out of Wilmington Air Park in Ohio, ATSG’s main operational base, using infrastructure formerly used by DHL Express. Using four B767 freighter aircraft, the project was said to involve a hub-and-spoke air freight operation out of Wilmington (ILN) with four flights a day to and from four other confirmed airports: Allentown, PA (ABE); Ontario, CA (ONT); Tampa (TPA); and Oakland (OAK).
In January, Lloyd’s Loading List also reported that Amazon had registered with the US Federal Maritime Commission (FMC) as a licensed Ocean Transportation Intermediary, allowing it to sell ocean freight services as an NVOCC, sparking further speculation about its expansion ever deeper into international logistics.
And then in February, Amazon documents seen by Bloomberg News revealed a far bolder plan. Bloomberg reported that a 2013 report to Amazon’s senior management team had proposed an aggressive global expansion of the company’s ‘Fulfillment By Amazon’ 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. Bloomberg said the project, called ‘Dragon Boat’, is proceeding, according to a person familiar with the initiative.
According to Bloomberg, Amazon’s plan would culminate with the launch of a new venture called “Global Supply Chain by Amazon”, as early as this year. The new business would place Amazon at the centre of a logistics industry that would amass inventory from thousands of merchants around the world and then buy space on trucks, aircraft and ships at reduced rates.