Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
E-tailing giant Amazon.com, Inc. has made little secret of its desire to more effectively manage its own supply chain and to take over the supply chains of its customers, and its announcement late Tuesday that it will break ground later this year on a $1.5 billion air hub at Cincinnati/Northern Kentucky Airport is a major step on that quest.
The facility, to be located in the Cincinnati suburb of Hebron, Ky., will contain 11 buildings, according to a research note by Colin Sebastian, an analyst for Robert W. Baird, an investment firm. It will be the focal point of Seattle-based Amazon's growing fleet of dedicated freighter aircraft—of which 16 of a planned fleet of 40 are operational—to support its "Prime Air" network for two-day deliveries. More importantly, especially for traditional transport and logistics firms that don't think Amazon competes with them, this new facility places another piece in the company's ambitious jigsaw puzzle of controlling a greater portion of its supply chain, and those of its third party merchants that use the "Fulfillment by Amazon" (FBA) service, over time.
Though it is not clear, the assumption is that the Cincinnati hub will replace Amazon's existing operations at the nearby Wilmington, Ohio, air park, which were not dedicated Amazon facilities. A local report said Amazon employees there would be offered jobs in other parts of its network. The new operation is expected to employ 2,000 full-time workers, Amazon said.
Amazon chose the site for its central location, skilled workforce, and proximity to its other nearby fulfillment centers, Dave Clark, Amazon senior vice president of worldwide operations, said in a statement. Besides the air cargo fleet, Amazon has a network of 4,000 trailers, a crowd-sourced courier service, called "AmazonFlex," for last-mile deliveries, and an ocean freight forwarder license for its Chinese operation which enables it to serve the U.S. According to published reports, Amazon has handled the movement of 150 containers in the past few months. All of this, and what may be still to come, are enabling Amazon to move beyond its roots as an online retailer, and to define itself as a "transportation service provider" carrying freight for both its direct retail customers and third-party wholesalers participating in the FBA program.
SUPPORTING BOTH GOALS
The Cincinnati airport is ideally located to support both of those goals, sitting in a fast growing cargo hub that is part way between an "Amazon Prime Air" facility in Wilmington and the Amazon subsidiary Zappos.com's fulfillment center in Shepherdsville, Ky., said Jim Tompkins, CEO of supply chain consultancy Tompkins International.
By combining that central location with a growing aircraft fleet, Amazon could be positioning itself to move from standard two-day delivery for its Prime customers to one-day delivery, Tompkins said. Such fast service could help Amazon counter a competitive move from rivals like Wal-Mart Stores Inc., which said yesterday it would provide two-day shipping for free.
"The only hole in (Amazon's) bucket is when they have slow-moving items that can't be stored in all their fulfillment centers, so they're stored in just one or two distribution centers (DCs) instead of 40 to 50 sites," he said in an interview today. "The only way to do [next-day shipping] then is to have more air capacity and more airplanes. And that is exactly what they're doing."
Even for a company of Amazon's size, the only way to provide such fast fulfillment at a reasonable cost is to achieve enough volume to drive down the cost of order picking by automating its DCs and to cut the costs of home delivery by increasing delivery density, he said.
"That is part of the brilliance of Amazon: That they realize what drives efficiency in fast delivery and great customer service is to have high volumes. Scale is king," Tompkins said.
Amazon has 11 fulfillment centers in Kentucky alone, with at least 13 fulfillment centers within a 150-mile radius of the planned Cincinnati facility, providing plenty of package volume to generate significant per-unit savings, Sebastian of Baird said.
Transport savings have become one of Amazon's many Holy Grails. Its shipping costs have exceeded shipping revenue for several years, due to the explosive growth of its business and, the company believes, its lack of custodial control of its shipments. Tomorrow, Amazon releases its fourth quarter and year-end results, which will include shipping trends during the key holiday peak season.
The move to Cincinnati is a blow to Wilmington, which has spent the past eight years rebuilding its presence after package giant DHL Express ceased domestic U.S. service in 2009 and closed its national hub there. DHL today uses the same Cincinnati airport where Amazon will build its hub.
The air park has 1,300 acres, two runways, and 3 million square feet of office, industrial, and hangar space. In an email, Wilmington officials said they are optimistic about the air park's future. The work with Amazon "proved its ability to handle a major cargo project reliably and cost effectively," they said. City officials said they are in on-going discussions with other airlines. About 1,300 people are employed at 12 companies in the air park.
Satish Jindel, president of consultancy SJ Consulting, believes Amazon is taking a big gamble relocating from Wilmington to Cincinnati. In a letter to be sent tomorrow to Amazon Chairman and CEO Jeffrey P. Bezos, Jindel said Amazon would save about $1 billion by developing a hub in Wilmington, and that it would be up and running sooner. Jindel added that it would be easier and less expensive to hire and train workers in Wilmington than in Cincinnati. In a phone interview today, Jindel said Amazon would have an all-cargo facility at Wilmington at its disposal, whereas at Cincinnati it would share space with passenger airlines.
Though Jindel has doubts about the move, he doesn't have any doubts about Amazon's strategy. The fast-growing FBA service has been taking business from Memphis-based FedEx Corp. and UPS Inc., both of whom had these merchants as former customers, Jindel said. What's more, consumers and businesses that order on Amazon's website were once the customers of retailers that are FedEx and UPS shippers, he said.
"FedEx and UPS need to get their heads out of the sand and bring in outside people with a different vision" of dealing with a company like Amazon, Jindel said.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.