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Will Amazon Kill FedEx?

From Bloomberg Business Week

Last fall, when he was running for mayor of Wilmington, Ohio, John Stanforth heard a rumor.

A big company was testing an airfreight operation at the local airport, Wilmington Air Park. Whoever it was wanted to keep the project quiet. People who frequented the airport said the company was wrapping its packages in black plastic to obscure any lettering and referred to its experiment as Project Amelia. He wasn’t sure which company it was, though some people were whispering it was Amazon.com.

Stanforth, 71, owns a storage business and looks a bit like the actor Jeffrey Tambor. In November he easily won the mayoral election. But even then he didn’t ask too many questions about what was going on at the airport. He didn’t want to jeopardize anything by being too nosy. “Guys, just bring me the jobs,” he recalls thinking.

Wilmington is about 35 miles southeast of Dayton and has a population of about 12,000. Jobs used to be plentiful. The air park was a hub for Airborne Express and then DHL, the German shipping company, which bought Airborne Express in 2003. Thousands of people toiled at the airport, sorting packages that arrived and loading them onto outbound planes. It wasn’t the most spiritually rewarding work, but it paid well, enabling package handlers to patronize the shops on Wilmington’s Main Street, to get haircuts in the barbershop and body illustrations at the tattoo parlor. Even the local bookstore did great business, especially when Harry Potter novels came out. “They shut down the main street,” Stanforth says wistfully, about the release party the store threw in 2007 for the seventh book in the Potter series. “There were people everywhere. Our Rotary Club made $1,000 selling shaved ice. A thousand bucks!”  Screen_Shot_2016-09-06_at_10.07.48_AM.png

In 2008, DHL shuttered its Wilmington operation, and almost everybody at the air park lost their jobs. “It was devastating,” Stanforth says. “You can’t lose that kind of an industry in a small community and not be hurt.” The following year, the city was featured on a 60 Minutes segment as a symbol of recessionary America. “When President Obama spoke of ‘the winter of our hardship’ in his inaugural address, no one in America understood that better than the folks we met in Wilmington, Ohio,” correspondent Scott Pelley said.

Starting in September 2015, people in the city noticed more planes flying in and out of the airport, loading and unloading those black-wrapped boxes. This March, Amazon announced that it was leasing 20 Boeing 767s from Air Transport Services Group, a cargo company that operates out of the air park. Amazon had also negotiated an option to buy nearly 20 percent of the company. “We’re excited to supplement our existing delivery network with a great new provider, ATSG, by adding 20 planes to ensure air cargo capacity to support one- and two-day delivery,” Dave Clark, Amazon’s senior vice president for worldwide operations, said in a statement at the time. Amazon denies wrapping its boxes in black during the trial period.

Two weeks after Amazon’s announcement, I meet with Stanforth in a conference room outside his office at the municipal building. He’s joined by Marian Miller, his lively executive assistant, and Bret Dixon, Clinton County’s economic development director. Amazon still hasn’t said much about its plans for the air park, but Stanforth is hopeful there will be some jobs soon.

The mayor, who wears a green fleece jacket and confesses to being a little hard of hearing, lets his younger colleagues do most of the talking. “We don’t know what it’s going to do yet,” Miller says, “but we’re crossing our fingers. We have people that like slinging packages.”

It’s hard to tell who’s more pro-Amazon, Miller or Dixon. “They’re changing the face of e-commerce,” Dixon says.

“They are a feel-good company,” says Miller. “Who wouldn’t want a feel-good company like Amazon? Look at the way they treat their customers and their employees!”

The conversation turns to those Harry Potter events. Stanforth perks up. “Well, we had a local bookstore that really promoted it and took the initiative,” he says. “Sad to say, it’s closed up. Wonder who closed them up?”

Miller gives him a look. “Don’t say it.”

“Where does everybody get their books now?” Stanforth says, grinning.

“Don’t say that,” Miller warns him again.

“Amazon,” Stanforth says.

“I knew you were going to say it,” Dixon says, shaking his head.

Two months after the Ohio announcement, Amazon leased 20 more jets from Atlas Air, an air cargo company based in Purchase, N.Y. Amazon has also purchased 4,000 truck trailers. Meanwhile, a company subsidiary in China has obtained a freight-forwarding license that analysts say enables it to sell space on container ships traveling between Asia and the U.S. and Europe. In short, Amazon is becoming a kind of e-commerce Walmart with a FedEx attached.  READ ENTIRE ARTICLE 

 

Topics: Transportation logistics 3PL