The Amazon Transportation Services office is said to be part command center, part technology development hub. The nearly 25,000 square foot office at Atlantic Station could employ about 150 people. The expansion was codenamed Project Box in economic development circles.

Amazon is quietly building out a logistics technology and services office in Atlanta — a national supply-chain hub and believed to be on the shortlist for the tech juggernaut’s proposed $5 billion second headquarters.

In April, Atlanta Business Chronicle first reported that Amazon had leased nearly 25,000 square feet— or a floor — at an Atlantic Station office tower. Few people in real estate and tech circles knew what Amazon was planning for the office, beyond being told it was a “new business unit.” Until now.

Seattle-based Amazon (Nasdaq: AMZN) is said to be building out its Amazon Transportation Services (ATS) team at the 25-story tower in Atlantic Station, a mixed-use development in Midtown, sources said. Amazon declined comment.

The Atlanta expansion was codenamed Project Box in economic development circles. The project likely qualifies for incentives under Georgia's Quality Job Tax Credit Program. Amazon could receive $3,000 in credits per job created, if it adds more than 50 jobs.

ATS is Amazon’s attempt at bringing some of its logistics infrastructure in-house. By doing so, Amazon hopes to squeeze costs from the system, incorporate new technologies and better control the customer service experience.

While it is unknown how many jobs Amazon plans to add at Atlantic Station, the office could accommodate about 150 people, according to real estate industry estimates.

The Atlanta ATS office, described by a source as being a “high priority” initiative for Amazon, will be part command center, part technology development operation. It will include on-site product management and product development, the source said.

“(The Atlanta office) is not just about monitoring the supply chain, but developing software and processes to reduce costs and boost margins,” the source said. “Amazon is ruthless about costs, so they can pass on the savings to the customer and delight the customer every day.”

As Amazon scales — the company owns more than 70 million square feet of warehouse space in North America — it needs an increasingly sophisticated logistics network. Amazon is developing technologies and processes to squeeze costs out of its supply chain and improve customer-delivery times.

Amazon is cherry-picking logistics functions do in-house less expensively and better than third-parties, noted C. Dwight Klappich, a Gartner research vice president.

“Amazon is looking to exploit technology so it doesn’t have a proportional cost increase for every extra bit of logistics they do,” Klappich said.

With its ATS office, Amazon joins a strings of logistics companies expanding in Atlanta.

Chicago’s Coyote Logistics has leased nearly 50,000 square feet at Armour Yards, where it will open a second metro Atlanta office and create 325 jobs. San Francisco-based logistics technology firm Flexport Inc. will i nvest up to $100 million in an Atlanta, creating more than 200 jobs over the next several years. And, Atlanta-based United Parcel Service Inc. (NYSE: UPS) is investing $400 million in a ground transportation hub in the city’s southside and create more than 1,200 jobs.

Metro Atlanta is home to more than 12,300 logistics providers, who employ more than 150,000 people, according to the Metro Atlanta Chamber. Seven of the world’s top 10 supply chain management software suppliers have headquarters or offices in metro Atlanta, including Manhattan Associates Inc. (Nasdaq: MANH). The Georgia Tech Supply Chain and Logistics Institute, bills itself as the largest supply chain and logistics leadership institute in the world.

Atlanta puts Amazon in two-hour flight proximity to 80 percent of the United States and provides access to a cluster of Fortune 500 companies in the city.

“You have a lot of the ecosystem that would be involved in logistics,” Klappich said. “For an Amazon, it would be a lot easier to be in Atlanta because you have UPS here and FedEx a four-hour drive away.”

Recent job postings reveal Amazon's plans for its ATS unit in Atlanta.

ATS is “pioneering new products, services, and technologies within our massive transportation network,” according to a job posting for a transportation broker. “We are building systems and capabilities to ensure that our carriers are successful and our customers’ freight no matter how large or small, is delivered as quickly, accurately, and cost effectively as possible.”

ATS is seeking an Atlanta-based applied scientist to join its Planning and Forecasting team. The successful candidate would work on big data technologies and build intelligent systems.

“Successful Research Scientists within this group are innovators who ... are capable of breaking down complex problems and making data-driven decisions, based on a rapid test and learn approach, that best serve customers,” according to a recent job posting.

The group is also seeking a Transportation Software Engineer “to drive improvements in Amazon’s fulfillment network by identifying more efficient methods of Middle Mile transportation in terms of planning and execution.”

The successful candidate will learn about “real-time adaptive transportation solutions, routing algorithms and optimizations, operating on large scale datasets.”

Amazon has, in recent years, acquired aircraft, trucking companies and made investments in shipping businesses. Amazon is also investing in more high-tech delivery technology, such as aerial drones. The company has patented a blimp-like warehouse that would float above cities and deliver product via drones.

Amazon is making aggressive investments in “heavy iron’, noted Greg Aimi, Gartner’s director of supply chain research.

“The company is moving from a high-tech, almost all-margin company, to one that has lot more brick-and mortar and heavy equipment assets that depreciate over time,” Aimi said. “With technology, Amazon is creating a transportation services system that offers something that doesn’t exist on the market — they can’t buy it.”

The Transportation Services unit will initially serve Amazon’s e-commerce and grocery business needs — shipping product from factories to warehouses, Whole Foods stores and customers, Aimi said.

Longer-term, and once the infrastructure is built our, Amazon could sell its logistics network as a service, just as it sells cloud storage and messaging services to businesses via its Amazon Web Services (AWS) unit, the analyst suggested.

Abundant and relatively inexpensive tech talent is also driving Amazon to expand its other Atlanta tech operations — Amazon Web Services (AWS) and visual search technology subsidiary A9.com.

In July, Amazon doubled its office footprint to more than 40,000 square feet at Buckhead’s Terminus 200 office tower, where the AWS and A9 units are based.

Meanwhile, Atlanta is likely on the short list of sites Amazon is considering for its 8 million square-foot second headquarters.

Dubbed "HQ2," the more than $5 billion development will bring with it 50,000 jobs, Amazon said Sept. 7.

Amazon is seeking a "development-oriented" market, site consultant John Boyd Jr. told Atlanta Business Chronicle at the time of the announcement.

"Atlanta should be the on the short list,” Boyd said. “Any competent site search for headquarters will look at Atlanta.”

The first phase will involve an up to 1 million square-foot building to be developed by 2019, according to a filing by Amazon.

The company is considering greenfield sites of about 100 acres, infill sites and existing buildings with on-site mass transit and within 45 miles of an international airport.