Amazon.com, Inc. (AMZN - Free Report) plans to invest around $100 million to build an air cargo hub at Lakeland Linder International Airport via a 20-year deal, per reports.
Per the deal, the company will lease 47 acres to build a seven-jet cargo hangar, with an option to expand on an additional 62 acres.
The facility, which is expected to span 223,000 square foot with two accessory buildings of up to 60,000 square feet, will be Amazon's largest facility in the Southeast. The company expects the new facility to create hundreds of new jobs and support the growing fleet of cargo planes.
This deal is another step in Amazon’s moves toward building its own in-house shipping and logistics service.
Amazon Beefs Up Logistics
Amazon is taking bold steps to get an edge in the logistics business. This is evident from the company’s efforts to use air cargo hubs and drones to deliver products to customers.
Just last week, the company announced an investment of $1.5 billion in a 3-million square feet air hub that is expected to house around a hundred cargo jets for making package delivery faster.
Last December, the company had announced plans to open a regional air hub, which is expected to commence operations from 2019 and create multiple job opportunities for North Texas residents, at the Fort Worth Alliance Airport.
Additionally, Amazon had announced plans to open another regional air hub at the Fort Worth Alliance Airport in Texas last December.
The most recent move underscores Amazon’s accelerated push toward building its own in-house shipping and logistics service to support the complex network of fulfillment, logistics and delivery systems that it has been building.
Building its own in-house shipping and logistics service will help Amazon address increasing delivery demand and improve delivery speed at the Prime business.
Amazon is making all possible efforts to build its U.S. air network to speed up delivery commitments for Prime members.
The company benefits from robust Prime program, which gives it a competitive edge in the retail business. Prime also boasts a loyal subscriber base. It offers fast delivery options for encouraging customers to spend more on Amazon, in turn helping to boost the company’s revenues.
Notably, Prime members are much more loyal and spend double the amount spent by non-Prime members.
Given increasing engagement of Prime customers, it is leaving no stone unturned to ensure that their requirements are met. From the span of a day to two hours, two hours to 15 minutes and 15 minutes to two minutes, Amazon has been cutting down on delivery time for Prime members.
Therefore, we believe that the company is moving in the right direction by gaining control over its delivery services network, the demand for which is expected to grow going forward.
Zacks Rank & Stocks to Consider
Amazon currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks in the broader technology sector include Facebook, Inc. (FB - Free Report) , IAC/InterActiveCorp (IAC - Free Report) and AXT, Inc. (AXTI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth for Facebook, IAC/InterActiveCorp and AXT is currently projected at 20.2%, 20.5% and 15%, respectively.
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