June 1, 2023
Amazon dials again air cargo service as demand cools, contractor says

An Amazon-branded Boeing 767 freighter, nicknamed Amazon One, flies over Lake Washington in the course of the Seattle Seafair Air Present on Aug. 5, 2016 in Seattle.

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Certainly one of Amazon‘s key air cargo operators mentioned Monday that the e-commerce large is scaling again on flights this 12 months, citing decrease demand and slower financial development.

Air Transport Companies Group, which runs a good portion of Amazon’s air cargo fleet, mentioned it expects to function Boeing 767 freighters devoted to servicing Amazon and DHL at diminished schedules and fewer flight time per plane.

“Each firms are adjusting their floor and air distribution and achievement networks in america to adapt to diminished U.S. financial development and client spending ranges within the first half of 2023,” ATSG mentioned.

Air cargo charges, which surged in recent times on account of port congestion and excessive demand for quick deliveries, have slumped. The Baltic Air Freight Index was down greater than 33% on Jan. 30 from a 12 months earlier. The Worldwide Air Transport Affiliation mentioned final month that air cargo demand in November was down almost 14% from the year-ago interval, whereas capability fell 1.9%.

In the meantime, passenger airways have mentioned journey demand has held up as customers prioritize journeys and different experiences.

However coming off Amazon’s weakest 12 months for development in its quarter century as a public firm, CEO Andy Jassy has taken steps to curtail bills. That features chopping greater than 18,000 jobs, pausing warehouse growth and shuttering some initiatives.

Amazon constructed out its achievement and logistics community at a frenzied tempo in the course of the Covid pandemic, as demand for e-commerce surged. Since then, rising inflation and a slowdown in client spending has compelled Amazon to downsize. The corporate has weighed promoting extra area on its cargo planes to different airways, Bloomberg reported final December.

ATSG mentioned Monday that Amazon could not lengthen its leases on 5 Boeing 767-200 freighters, that are on account of expire between Could and September. Amazon opted to proceed leasing 4 767-200s into 2024, it added.

Shares in ATSG slumped 9% in afternoon buying and selling. Amazon’s inventory fell about 1%. A consultant from ATSG did not reply to a request for remark.

After publication of this story, an Amazon spokesperson mentioned in an emailed assertion that the assertion the corporate is scaling again flights “on account of decrease demand general and gradual financial development is fake.”

“As a part of our annual planning, we routinely cut back our flight schedules at the moment of 12 months to account for the standard post-holiday fluctuations and for plane upkeep,” the spokesperson mentioned.

Amazon in October employed Hawaiian Airways to fly massive, rented Airbus cargo jets, and mentioned it will retire some older planes.

Via Amazon Air, the corporate has constructed up a burgeoning air community to manage extra features of the supply course of and guarantee quicker supply. It invested in ATSG and Atlas Air Worldwide Holdings, although Atlas agreed final 12 months to be taken non-public by an investor group. Amazon additionally contracted with passenger airline Solar Nation to supply crews and planes to fly packages. The e-retailer sometimes leases freighters from its air contractors, however it has additionally bought used jets from Delta and WestJet.

Along with Amazon and DHL decreasing their air cargo schedules, supply large FedEx has additionally introduced cost-cuts that embrace parking planes and chopping some company jobs.

WATCH: How the pandemic shifted how Boeing and airways take into consideration air cargo

Amazon dials again air cargo service as demand cools, contractor says

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