Amazon expanding operations at Leipzig-Halle Airport

2/16/2020

Amazon is expanding its operations at Leipzig/Halle Airport, with the airport confirming that preparatory earthworks are scheduled to start in the next few days for the purpose of creating a 20,000 sqm cargo terminal for Amazon in the southern part of the airport site next to the airport’s existing World Cargo Centre.

“The aim is to use the new building to improve the operational processes,” the airport said. “The preparatory earthworks are scheduled to start in the next few days.

“Construction work will commence once the official permits have been obtained and are planned to be concluded later this year. This expansion will create more than 200 new jobs in the Leipzig community.”

Since the decision more than a decade ago by DHL Express to move its European and global air hub there, Leipzig/Halle Airport has expanded rapidly to become the second-largest cargo airport in Germany and the number 5 in Europe, handling around 1.24 million tonnes of air cargo in 2019.

As reported in Lloyd’s Loading List, some commentators believe Leipzig has the potential to emerge as a cross-border e-commerce hub serving Berlin’s vast consumer market, with its high number of millennials with a propensity to purchase goods online.

Indeed, Airport Development recently sold a 114,500 sqm plot of land at the site to Panattoni Europe, with the property developer planning to invest around €40 million in the construction of a logistics centre offering more than 50,000 sqm of handling space. Delivery is scheduled for early 2021.

Leipzig Airport-based DHL airline, European Air Transport (EAT), has reportedly been flying extensively during the day for Amazon with its B757 freighters serving East Midlands, Paris and Madrid, with the aircraft returning to duty on behalf of DHL Express for overnight intra-European operations.

Of the mid-sized cargo-specialist airports in Europe, Belgium’s Liège has been probably the most successful to date in attracting major e-commerce players, having been selected by Alibaba’s logistics arm, Cainiao Smart Logistics Network, as the location of one of its five global hubs. The Chinese giant is planning to invest €75 million at the airport, with Cainiao leasing a 220,000 sqm facility that is scheduled to start operations in early 2021.

“I think what is happening in Liège could happen in Leipzig,” Airport Development’s director of business development at its Airport Park Leipzig Halle Andre Morrall, told Lloyd’s Loading List. “It certainly has the necessary assets in terms of available land, proximity to an airport, and a strong e-commerce purchasing demographic.

Some commentators believe it is only a matter of time before Amazon launches its Prime Air freighter operation in Europe following the fast-paced and successful roll-out of the airline unit and its network in the US over the past few years.

In Europe, Amazon currently draws on the air cargo capacity of third-party providers, in particular, DHL. Its subsidiary, European Air Transport, provides aircraft to Amazon during the day and to the express division of Deutsche Post in Europe at night. However, this is set to change as Amazon seeks to drive down transport costs in Europe through having greater control of its air network, according to a study by Germany’s KfW Ipex Bank, entitled, Who's afraid of Amazon? 

“The frequency of flights by aircraft carrying Amazon parcels has increased considerably in recent months at the most important locations in Germany, for this purpose, namely Cologne/Bonn and Leipzig/Halle airports. Similar to the Cincinnati/Northern Kentucky airport in the USA, the retail giant is also using DHL's expanded distribution centre in Leipzig and is developing it into its own transport hub,” the study authors wrote.  

This is also attracting other cargo airlines to the location, such as new player, Cargo Logic Germany, which is focusing on express cargo in the e-commerce segment and therefore a competitor of DHL and a potential transport partner of Amazon, the study adds.

“Everything seems to indicate that, in parallel with ground transport, the intra-European flight networks of the online retailer will be further expanded as a reliable and fast alternative.”

The study predicts that Amazon will continue to “aggressively expand” its air and land transportation network - and possibly also a container line network.

This is driven on the one hand by the online giant's dynamic double-digit growth rates – and also because its logistics costs outside North America are too high.

The report went on to note that Amazon Air is now the fourth largest all-cargo operator measured in fleet size, behind DHL, UPS and FedEx. Its fleet is expected to increase from 50 to 70 aircraft by 2021 and its $1.5 billion hub at Cincinnati International Airport (Ohio) will be able to accommodate 100 aircraft on completion in 2021