Amazon Transportation Services (ATS)

Introduction for OLO (Ops Leader Orientation)

2018
 ATS focuses on the “middle mile” of Amazon’s OB logistics
value chain SIMPLIFIED
NETWORK
CARRIER

Carrier
Network
Model Fulfillment National Distribution Regional Distr. Dedicated Delivery
Center (FC) Center (Hub1) Center (Hub2) Unit (DDU)

Regional
Dispatch FC
Model
Sort Center Hub2 DDU
(ATS)
WITH
ATS

FC

Direct
Dispatch FC

Speed and price Model

Amazon-managed
determine carrier Sort Center Delivery Station (DS) /
selection (ATS) DDU
FC

Company Confidential ATS-managed lane 2

ATS focuses on the “middle mile” of Amazon’s OB logistics
value chain
First Mile Middle Mile Last Mile

ATS
Sort Center 1

AMZL DS
Fulfillment
Center Sort Center 2

3P DDU
ATS

Fulfillment ATS
Postal / Commer-
Center 2 cial Carrier Hub

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ATS exists to provide room for amazon’s growth and deliver
better results
REASONS FOR INSOURCING ATS VS. INTEGRATED CARRIERS DELIVERY

Enable Amazon growth Deliver better results

STRATEGIC
CAPACITY FINANCIAL PERFORMANCE
ADVANTAGE

Carriers struggle to Delivery of an end-to- We can deliver at a We deliver better

keep up with end solution, enabling cheaper price point performance than
Amazon’s growth, the growth of AMZL commercial carriers
especially during peak and innovation

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 There are 12 Sort Centers in EU, with more opening in 2018

Active Sort Centers

Germany
– 1 Active Sort Center
(DTM8)
– 1 Launch in Q3-Q4
(HAJ8)

UK
– 6 Active Sort Centers France
(SLU1, SNG1, SEH1, – 2 Active Sort Center
SXW2, SXM2, SBS2) (ORY8, LIL8)
– 1 Launch in Q3-Q4 (LCY8)

Italy
– 1 Active Sort Center
Spain (MXP8)
– 2 Active Sort Center – 1 Launch in Q3-Q4
(MAD8, BCN9) (LIN8)

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The overall ATS network comprises >400 nodes and >3,000
lanes

KEY FIGURES
400 unique nodes
759 UK customer
lanes
197 AMZL
continental Europe
lanes
403 EFN lanes
1593 Transfers
lanes

*2017 peak numbers

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Significant growth is expected in EU ATS between 2017 and
2018
EU Sorted Outbound Packages (M Shipments) EU Amazon-Managed Linehaul Loads (M Loads)

~+80% ~55%
~640 ~1.1

~0.7
~360

2017 2018 2017 2018

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In peak day 2017, EU ATS organization comprised 5,621
people

• 4,764 Temporary Associates (TA) were hired across EU during Q4 2017,

which was 17% higher YoY.

• This took our headcount to a total of 5,621 during Wk 51.

• We employ TA to ensure that the Sort Centers can process the higher
volumes experienced over Peak.

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The ATS organization can be broken down in 5 blocks
AMAZON TRANSPORTATION SERVICES - ATS
Sort Center Ops Sort Center Ops
Execution Integration
Day-to-day management of Deliver SC-related projects
PURPOSE
Sort Centers and Yard
TEAM
operations
• Daily sortation activity • Engineering and capital
• Monitoring of projects
TEAM MAIN ACTIVITIES
performance, efficiency • Launches of new SCs
and safety metrics • Process standardization
and continuous
improvement
• Labor planning
• SC metrics development
• Short-term network
optimization
• Technology development
for Sort Centers
Air Line Haul Surface Line Haul
Develop and manage Day-to-day management of
Amazon’s Air Line Haul Amazon’s own surface
network transportation and delivery
of Line Haul-related projects
• Planning, scheduling • Planning, scheduling
and execution of Air and execution of Surface
Line Haul operations Line Haul
• Monitoring of • ATS Purchased program
performance and management
efficiency metrics • ATS Dedicated program
management
• ATS Brokerage program
management
• Monitoring of
performance and
efficiency metrics
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Network Planning
Design the ATS network at a
tactical and strategic level
leveraging Operations
Research models
• Operations Research
• Long-term tactical and
strategic network design
• Program Management of
Postal Injection
initiatives
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Agenda: Sort Centers

AMAZON TRANSPORTATION SERVICES - ATS

1
Sort Centers

2
Line Haul

3
Network Planning

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 SCs can be operated through an “Auto-sorter”, a “Mechanical”
sorter or “Manual” sortation
Auto-sorter: ORY8 (France)
Automated, intelligent system that doesn’t
require manual work for sorting packages
Configuration in the example:
• Capacity: 18k / hour
• Type: Automatic shoe sorter
• Sorts on 210 individual destinations
Mech: MXP8 (Italy)
Sortation is performed manually with the
support of mechanical installations
Configuration in the example:
• Capacity: 12k / hour
• Type: Mechanized manual sorter with sort slide
• Pre-sorts on 4 lines - each line then manually
sorts up to 46 individual destinations
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Manual sort: SXW2 (UK)
Sortation is performed manually with
minimal (simple conveyor belt) or no
mechanical equipment involved
Configuration in the example:
• Capacity: 1.5k per hour /belt; 10.5k in total
• Type: Manual sort with powered belts
• Sorts: 46 individual destinations
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SCs operations are monitored on six main sets of metrics

TYPE METRIC EXAMPLE DESCRIPTION

1 Recordable Incidents
Safety Number of safety incidents that are recorded for 200,000 hours worked
Rate

2 Sorted Volume Number of packages that are sorted per day

Volumes
Number of packages that are cross-docked per day (SC only moves pallets
X-dock Volume
without touching each package)

3
Percentage of packages that are delivered to the customer by the PDD
Performance DEA Performance
(Promised Delivery Date)

4 Compliance SSP compliance Percentage of packages scanned over total packages sorted
5
Efficiency TPH Number of packages sorted per person-hour
6 Financial Cost Per Package Average cost to sort a package

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Yard Time-lapse – SLU1

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Agenda: Line Haul

AMAZON TRANSPORTATION SERVICES - ATS

1
Sort Centers

2
Line Haul

3
Network Planning

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ATS Linehaul connects Amazon’s middle mile

We schedule We collect We deliver

FC DS
10:00
22:00
17:00
19:15
21:00

13:00
13:00
23:00
17:00
19:30
22:00
23:00
10:00
16:00
22:30
17:00
17:15
13:00
2:00

2:30

ATS Scheduling Team is the planning
backbone between FCs, SCs and
DSs. ATS Team makes sure Fulfilment
Centers and Sort Centers have the
right amount of transportation capacity
at the right time
ATS supports the interface between
carriers, FCs, SCs and local teams,
ensuring best rates, standardized
equipment, best service level and end-
to-end communication to solve
operational issues
ATS oversees the journey of
customers’ shipments until last mile
delivery point ensuring the highest
commitment to promise, fastest means
of transport and highest level of
customers satisfaction

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ATS Line haul adopts three operating models

1 2 3

ATS Purchased ATS Dedicated ATS Brokerage

A pan-EU and regional linehaul fleet A pool of trailers that can be loaded The customer-focused marketplace
able to provide consistent capacity and unloaded depending on site for reliable, on-demand and
and coverage at the best price, on- production pattern and that can be economical transportation
time performance and flexibility pulled between sites capacity for Amazon customers

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…using Amazon trailers

Using only Amazon trailers

2

ATS Dedicated ATS Dedicated ATS Brokerage

A pool of trailers that can be loaded

+ Reduce dock congestions + Reduce yard space requirements
and unloaded depending on site
production pattern and that can be + Increase driver productivity + Reduce transportation cost
pulled between sites

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Agenda: Network Planning

AMAZON TRANSPORTATION SERVICES - ATS

1
Sort Centers

2
Line Haul

3
Network Planning

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 Our network planning cycle follows the company business planning
cycle, based on an annual review with a rolling 5-year horizon

SPS Years 2-6 STRATEGIC PLANING

(Strategic Planning Session)
SPS Years 1-5
(Strategic Planning Session)

Year 1 Year 2 Year 3 Year 4 Year 5

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

OP1 provides the plan for the coming year

OP1 Year 2
(Operational Plan 1) OP2 revises OP1 for the same year

OP2 Year 2
(Operational Plan 2)

OP1 Year 3
(Operational Plan 1) OPERATIONAL PLANNING
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EU ATS is building Amazon Air

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Air network built in last 3 months …. 60 weekly flights

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How to build a Cargo airline for our customers?

12X

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 Thank you!

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Amazon Confidential 24