Amazon and DHL reported to be in hub partnership at CVG

Update, 21 March 2017: Late today, Amazon confirmed to Cargo Facts that it would be working with DHL, saying: “We are looking forward to the first Amazon planes appearing at CVG this spring and to working with DHL in support of our cargo operations. “

Lost in the coverage of Amazon’s announcement in February that it would build a huge new air hub at Cincinnati/Northern Kentucky Airport (CVG) was one oddity. In its initial announcement, Amazon did not specify when it intended to begin operating from the new hub, but, two weeks later, CVG Airport told Cargo Facts it expected Prime Air cargo jets to begin arriving at CVG starting this spring. Since construction of the new hub would probably not even have begun by then, we wondered how Amazon would manage a major hub operation with no ramp space and no sort facility.

The airport said that during the interim period until new facilities were built, Prime Air would utilize existing airport ramp areas. But that begged the more important question of sortation. Even if ramp space for the Prime Air fleet could be provided, who would load and unload the freighters and sort their contents?

Today, if a story in The Lane Report is correct, we have the answer: Starting in May, Amazon will begin daytime use of DHL’s Americas Hub at CVG. Amazon chose not to comment, but the report quotes Bea Garcia, DHL’s media relations director for the Americas, as saying: “DHL can confirm that it has been contracted to provide a range of services to Amazon at the DHL Cincinnati Hub, including sorting operations and ground handling for the Amazon air network. We look forward to providing further support to this global customer.”

But in answering the original question, Ms Garcia raises an even more interesting question: what might “further support to this global customer” include?

Before entering the realm of speculation, consider a few background facts.

• To form its Prime Air network, Amazon leased twenty 767 freighters each from Air Transport Services Group (ATSG) and Atlas Air Worldwide Holdings (AAWW), and contracted to have those companies’ subsidiary carriers operate the freighters on a CMI basis.

• As part of their respective deals with Amazon, both ATSG and AAWW agreed to allow Amazon to acquire significant stakes in their companies.

• DHL Express is the single largest customer for both ATSG and AAWW, and in fact owns a 49% stake in AAWW subsidiary carrier Polar Air Cargo Worldwide.

• ATSG subsidiary carriers ABX Air and ATI, which fly the 767s in the Prime Air network already operate for DHL out of the Americas hub at CVG (domestic service in support of DHL’s international business), as do AAWW subsidiary carriers Polar Air Cargo and Southern Air (mostly long haul service to Asia and Europe, but also some 737-400F domestic flying).

We concluded our original report of Amazon’s decision to move to CVG with the following speculation:

Cargo Facts would not be surprised if a partnership in some form emerged between DHL Express and Amazon. At this point, such a tie-up is pure speculation, but some cooperation could make sense. One possibility would be shared space on international and domestic flights operated for DHL. Southern Air already flies 737-400Fs to many secondary cities in the United States in support of DHL’s international operations, and space on some of those flights operated could be useful for Amazon. As could space on Polar and Southern’s flights to Asia, Europe, and the Middle East.

The hub-sharing agreement only makes our speculation seem more likely now.

Those interested in learning more about this subject should join us at Cargo Facts Asia in Shanghai, 25 – 26 April, where senior executives from ATSG, DHL Express, and YTO Express will participate in a session titled “The Impact of e-Commerce on Air Freight & Express.” For more information, or to register, go to CargoFactsAsia.com.