Amazon is delivering packages out of 'carnival' tents in a mad race to catch up to UPS and FedEx

Amazon tentKARK

  • Amazon is delivering packages out of "carnival" tents in cities across the US as it races to catch up with UPS, FedEx, and USPS.
  • The tent stations started popping up last year after Amazon announced a massive campaign to grow its last-mile logistics network by recruiting more delivery service partners, or DSPs, to hire and manage teams of drivers.
  • The structures take only a couple of weeks to build, allowing Amazon to launch rapidly in areas where it wants to expand its delivery network.
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Amazon is operating out of giant tents in cities across the US as it races to expand its delivery network to supplement and compete with UPS, FedEx, and USPS.

The tech company has pitched tents in at least eight states including Tennessee, South Carolina, Arkansas, Georgia, Colorado, Louisiana, Kentucky, and Idaho.

The structures serve as delivery stations, which is Amazon's term for the facilities that house packages until the last leg of their journey to customers' homes and businesses.

Amazon employees sort packages inside the tents, before delivery drivers load them into their vehicles and transport them to their final destinations.

Amazon tentsJim Gilton

Most of Amazon's more than 100 delivery stations in the US are housed in more traditional, permanent structures.

The tent stations started popping up last year after Amazon announced a massive campaign to grow its last-mile logistics network by recruiting more delivery service partners, or DSPs, to hire and manage teams of drivers.

All of the tent stations are meant to be temporary solutions while Amazon secures or builds more permanent homes for its delivery operations, an Amazon spokesperson told Business Insider.

A former senior Amazon employee said the sites, which are referred to internally as "carnivals," take only a matter of weeks to build and point to the dizzying pace at which Amazon expanding its reach.

Tents help Amazon rapidly launch in new cities

The tent stations are huge, standing up to 35 feet tall and ranging between 9,000 square feet and 18,000 square feet, and employ up to 300 people.

They are made of fabric pulled over steel framework and they don't require water or sewer lines. Bathrooms can be housed in nearby trailers.

Clearspan tentFacebook/ClearSpan Fabric Structures

The tents' quick construction time enables Amazon to execute rapid launches in areas where it wants to expand its delivery network, but hasn't yet secured a permanent building to house operations.

The tents also have a number of other perks. They require little-to-no property taxes and little maintenance. They also help save on energy costs due to natural lighting that filters through the fabric, according to the website for ClearSpan Fabric Structures, the Connecticut company that has provided some of Amazon's delivery tents.

Read more: Amazon drivers and managers describe harrowing deliveries inside trucks with 'bald tires,' broken mirrors, and faulty brakes

They aren't necessarily cheap to build, however.

The construction of one delivery tent in Memphis, Tennessee, was an estimated cost of $595,000, according to the Memphis Daily News.

Clearspan tentFacebook/ClearSpan Fabric Structures

While the tents provide Amazon a quick route for expansion, they can have some drawbacks.

Inclement weather, for example, can pose some concerns.

Reach more: UBS is now sounding the alarm on Amazon taking on UPS and FedEx - and analysts say the logistics giants have 'limited' tools to fight back

"If it's done in the right place with the right considerations, it can work," said the former senior Amazon employee, who spoke to Business Insider on the condition of anonymity. "But imagine this: a carnival in South Carolina hurricane season. Imagine having a carnival in the Midwest during the winter."

Heating isn't very effective inside the structures, according to Jim Gilton, an Amazon Flex driver who works out of a tent facility in Colorado Springs.

"There was very little heat over the winter," he said, noting that the station used space heaters to try and keep people warm.

Amazon tentsJim Gilton

ClearSpan says on its website that its tents are "climate responsive." "They stay cool in the summer and warm in winter," the website says.

The company also notes that the metal framework is "exceptionally strong" and meets all wind and snow load regulations.

Amazon's shipping costs explode to nearly $28 billion

Despite some of the potential drawbacks, the tent stations appear to be effectively aiding Amazon in its quest to build a logistics network to both supplement and compete with shipping giants UPS, FedEx, and USPS.

Amazon's shipping costs have exploded from $16.2 billion in 2016 to $27.7 billion in 2018.

To meet its delivery needs, Amazon relies on all three major carriers, as well as its own internal network of delivery service providers and Amazon Flex drivers.

Amazon tentsJim Gilton

Amazon currently handles shipping for an estimated 26% of its online orders, according to Wolfe Research. And it's looking to grow that share: amid an expansion of its air fleet and its push for more last-mile delivery partners, Amazon for the first time added "transportation and logistics providers" to its list of competitors in its most recent annual filing.

Read more: Amazon just quietly confirmed it is competing with UPS and FedEx

Marc Gorlin, the CEO of the crowdsourced delivery startup Roadie, said he's never heard of a company using tents to house packages.

But competition is fierce in the delivery industry, and just as traditional brick-and-mortar retailers like Home Depot and Walmart have started using their stores as distribution centers, Amazon is now looking for more physical outposts to get closer to customers.

"It's not surprising they are doing this," Gorlin said. "Demand is growing, and pitching a tent may be the quickest way to get a more efficient supply chain."

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