September 25, 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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Considered 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 progress.

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 decreased schedules and fewer flight time per plane.

“Each corporations are adjusting their floor and air distribution and success networks in america to evolve to decreased U.S. financial progress and shopper spending ranges within the first half of 2023,” ATSG mentioned.

Air cargo charges, which surged lately resulting from 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 practically 14% from the year-ago interval, whereas capability fell 1.9%.

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

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

Amazon constructed out its success 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 shopper spending has pressured Amazon to downsize. The corporate has weighed promoting extra house on its cargo planes to different airways, Bloomberg reported final December.

ATSG mentioned Monday that Amazon could not prolong its leases on 5 Boeing 767-200 freighters, that are resulting from 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 “resulting from decrease demand total and gradual financial progress 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 everyday 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 might retire some older planes.

By way of Amazon Air, the corporate has constructed up a burgeoning air community to regulate extra elements 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 personal 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, nevertheless it has additionally bought used jets from Delta and WestJet.

Along with Amazon and DHL lowering their air cargo schedules, supply large FedEx has additionally introduced cost-cuts that embrace parking planes and slicing 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