Inside Amazon’s first Alaska delivery station

With Anchorage streets mostly empty early on a November morning, dozens of workers at the new Amazon delivery station used tiny devices on their fingers to scan barcodes on packages. Details appeared on smartphones on their forearms, helping them organize the flood of shipments.

The daily Amazon Air cargo jet to Anchorage had arrived from Seattle the night before, and more than 15,000 boxes and envelopes would soon hit doorsteps in Southcentral Alaska.

Just outside, drivers began to fill delivery vans with packages.

“Five minutes!” shouted Mitchell Cox, who manages the delivery teams, letting another wave of drivers know they’d soon be off for the day.

Amazon, the world’s largest online retailer, opened its first delivery station in Alaska a year ago. It came well after the company had opened nearly 500 other delivery stations across the U.S.

But this one is unusual, company representatives say.

It gets its product from air deliveries, unlike delivery stations in the Lower 48 that get their packages from semitrucks.

Exactly how the facility will change Alaska’s economy remains to be seen. A larger Amazon presence could naturally mean continued pressure on the brick-and-mortar retail industry that has struggled for years against rising e-commerce, an Alaska economist said.

One thing is certain: Amazon package deliveries are growing in the state.

The delivery station last month marked its 3 millionth package delivery, said station manager Austin Empey.

“And it keeps getting busier, especially with holidays right around the corner,” he said as boxes slid down conveyor belts and heavy metal blared from speakers.

14 packages for everyone annually

In a first, Amazon Air plans to soon fly two large cargo jets to Anchorage per day, bringing packages for the holiday season and helping speed up delivery.

The jets will help the delivery station move about 20,000 packages daily for several weeks over the holidays, Empey said.

On normal days, the company delivers around 15,000 packages daily from Girdwood to around Big Lake, a region encompassing Anchorage, Wasilla and the state’s urban heart.

That’s about 14 packages annually for each person in the region including newborns, on average.

The company typically doesn’t know what’s inside. But electronics, dog food, beauty supplies and bottled water are commonly shipped through Amazon facilities, said Matthew Gardea, an Amazon spokesperson who led journalists on the tour of the station.

Some large shipments are obvious, Empey said.

“I’ve seen snow blowers, snow shovels, and during the summer, I saw more kayaks,” he said.

‘Busy for sure’

The station goal is two-day delivery from time of order, he said. That service is included for Amazon Prime customers.

Before Amazon opened the station — a former Sears warehouse off Dowling Road near the Seward Highway — deliveries could take several days, even weeks, he said.

At the time, the company got packages to the region through its Amazon Air Gateway at the Ted Stevens Anchorage International Airport.

The gateway, similar to one at the Fairbanks International Airport, relies on third-party delivery contractors, such as the U.S. Postal Service.

Now, Amazon’s delivery station in Anchorage has its own delivery drivers, more than 60 of them under two private contractors, Empey said.

About 100 employees also work at the warehouse, sorting packages largely overnight.

The company will hire more workers for the holiday season, when warehouse employee numbers should grow to 150.

Warehouse workers start at $21.50 an hour, with flexible hours, health care starting at 20 hours, and financial support for higher education, Gardea said.

“We are busy for sure,” Empey said.

Deliveries optimized with AI

The delivery station has multiple deadlines at each step, Empey said.

Getting the drivers out that day was looking “pretty tight,” he said. “But we’ll make it. We’ll make it.”

Each package is tracked digitally, allowing shoppers to follow their package’s journey by app. The computer system uses artificial intelligence algorithms to fine-tune sorting and delivery, Empey said.

Inside the station, lights brighten at certain bays after workers scan barcodes on packages, showing where to place them. Packages are sorted into smaller and smaller groupings, eventually down to the neighborhood and street, Empey said.

Amazon’s computer system also builds routes for the driver, guiding package placement in the van for orderly removal.

“It calculates out the best route for efficiency and safety,” Empey said. “So it will minimize left-hand turns. It will try to avoid areas that are known for heavy traffic at rush hour.”

“So literally, the drivers hit start on their device and it will say, ‘Drive here, grab this package and drop it off. Drive to the next one, drop this one off,’ ” he said.

Packages aren’t warehoused at the facility.

“Our goal is we don’t want to store anything here,” Empey said. “So all the packages that you see here will get out today.”

The station’s delivery times have improved since it opened, after new workers were trained and routing precision improved, Empey said.

Last winter’s snow-clogged streets hindered vans too. Drivers carry shovels and other gear to dig out.

“Weather is probably our biggest challenge,” Empey said.

Pressure on retail, but a boost for some

The 90,000-square-foot building went through extensive upgrades after Amazon began leasing it a couple of years ago. It brings Amazon’s investment in Alaska to $80 million since 2010, the company said.

Gardea said Amazon supports 400 independent sellers in Alaska that are largely small and midsize businesses, he said.

“More than 60% of Amazon sales are from small and medium-size businesses,” he said.

Other economic benefits of Amazon’s increased presence in the state include spending by Amazon job holders, increased activity at the airport, and gas stations selling more fuel, said Dan Robinson, a research chief at the Alaska Department of Labor and Workforce Development.

A bigger Amazon footprint will also mean continued pressure on the retail industry, where jobs have struggled for years, he said. The industry was particularly hard-hit during the pandemic’s online shopping boost.

“To the extent that market continues to grow, then some retail dollars that have been going to our local retailers will shift to Amazon,” he said. “That has happened for at least a decade, and when consumers can get it that much easier, then that trend likely continues.”

Correction: This story has been updated with the correct square footage and ownership status of the Midtown Anchorage building that Amazon operates in. The company leases, rather than owns, the 90,000-square-foot building.