Amazon Air Cargo Flights Grow at Slowest Pace Since Early Pandemic
While Amazon continues to grow, the growth of its air cargo operations is slowing. The reason is two-fold: The company has fewer warehouses to supply and fewer packages moving through its air network. At the same time, e-commerce growth has returned to pre-pandemic levels.
Growth of Amazon Air’s air cargo fleet
Amazon is leasing aircraft to expand its air cargo operation. It started leasing aircraft for this unit in 2015. E-commerce has become increasingly popular around the world, resulting in a spike in demand for same-day deliveries. However, Amazon is not planning on adding 100 planes by the end of next year.
The company has recently reduced its overall rate of growth, perhaps in response to slowing e-commerce sales. The number of flights Amazon operated from March to August of this year was up only 3.8%, compared to a 14.3% increase in the preceding six months. This slowdown is in line with recent inventory pullbacks due to slowing e-commerce demand. In fact, Amazon Air has also cut back on its planned warehouses and facilities to reduce costs. This could also be related to concerns about a slow holiday season.
Growth of its base
In Europe, Amazon is prioritizing the growth of its air cargo flights base. The company is making notable moves, such as increasing its presence in Milan, Italy and Leipzig, Germany. This is an indicator of how the company plans to operate in the United States. The company is also taking on air freight operations in-house, where it will be able to better control costs and delivery speeds.
Until now, Amazon has mainly operated domestic flights with its own planes, but this is about to change. It is looking to expand its operations to a global scale. The company’s volume makes it difficult to switch between air freight marketplace players, and its dependence on external partners increases costs. However, the expansion of the company’s base could increase its overall capacity.
Growth of its air cargo operations
Amazon has doubled down on its air freight ambitions since launching Amazon Air in 2015. The company has invested in new aircraft, bringing its air fleet to the largest size since the early days of the pandemic. It plans to expand its air cargo operations by purchasing long-range cargo jets to ship products across the world. A spokesperson for the company declined to comment on the Bloomberg reporting.
While global economic uncertainty has caused a slowdown in air cargo demand, it has given industry leaders a chance to take stock of how resilient their supply chains are. The COVID outbreak made the industry realize the importance of cargo and the need to prepare with effective contingency plans. Air cargo carriers are improving their operations by increasing load factor and enhancing cargo handling in airports. Despite the growing popularity of e-commerce, the air cargo industry is still dominated by B2C businesses.
Effects of the pandemic on air cargo business
The effects of the pandemic on Amazon’s air cargo business are unclear, but the company has made significant investments in expanding its fleet. It now has 75 cargo aircraft, the fifth-largest dedicated fleet in the world. It also bought a minority stake in Air Transport Services Group and owns warrants for Atlas Air.
With the help of a partner carrier, Amazon flies packaged items to its customers. This is not an easy task for Amazon, which is vulnerable to cost escalation. However, its air cargo operations are expanding rapidly. The company is considering buying larger long-haul jets to bring in more goods from Asia.