Editorial: Amazon Invests in the Future

This Editorial appears in the Feb. 13 print edition of Transport Topics. Click here to subscribe today.

We’ve all heard the saying, “You have to spend money to make money.” A recent announcement from Amazon.com indicates that it is willing to invest heavily to expand its in-house delivery capabilities and boost its e-commerce business.

The online retailing giant announced Jan. 31 plans to build a hub in Kentucky to accommodate an air cargo fleet that currently consists of 40 leased planes. According to a company release, 16 of those plans are already in service. The new hub — to be located at Cincinnati/Northern Kentucky International Airport (CVG) and carrying a price tag Bloomberg News pegs at $1.49 billion — will allow Amazon to sort packages carried by that fleet, reducing its reliance on outside help such as UPS Inc. and FedEx Corp.

“We’ve worked hard to ensure CVG is a great place to do business, and we couldn’t be more pleased that Amazon recognized those efforts with plans to build a top-in-class air cargo hub at our airport,” said Candace McGraw, CEO of the airport.

For Amazon, it’s a big bet on in-house logistics, complete with a promise to add 2,000 jobs to support the facility. And it’s the latest in a long line of moves by Amazon to reinvest profits in new initiatives.

It bet that consumers would subscribe to its Prime service to get free two-day deliveries and access to its suite of Prime-branded video and audio services. And they do. It bet that people would welcome a voice-activated device into their homes through which they could order groceries, hear a weather forecast or listen to audio books. And they have; the company’s Echo, Tap and Dot devices — all equipped with Amazon’s “Alexa” voice-activated capability — are a hit.

These examples show how Amazon’s willingness to spend on the future can pay off down the road. Perhaps, as it relates to consumers, a long way down that road.

Recently, the 6-year-old daughter of a TT editor asked if their household had “Amazon shows,” as she wanted to watch a program she’d learned about from a friend. This child, and her friend, are already customers for Prime video. Before too long, they might be placing online orders via the Amazon home page that will be handled through that new airport hub.