Amazon Looks to Sell Excess Air Cargo Space as Demand Cools Inc. is trying to sell off excess space on its cargo planes, according to people familiar with the matter, its latest effort to adjust from rapid expansion in the pandemic era to a slowdown in online growth.

The e-commerce retailer, which has a fleet of about 100 aircraft in the US and Europe, has in recent months hired executives with experience marketing cargo space for airlines. Possibilities include filling empty jets returning from Hawaii and Alaska with pineapple and salmon, according to two of the people. An Amazon spokesperson declined to comment on the plans.

The long-term plan for Amazon Air has not changed despite the current turmoil, said one of the people, who asked not to be identified because the talks are confidential. Pressure to monetize unused space aboard the jets is mounting as the company looks to boost profits in a period of slower revenue growth, another person said.

Amazon unveiled the air freight service in 2016, sparking speculation that it would eventually create an overnight delivery network to compete with United Parcel Service Inc. and FedEx Corp. Amazon Air operates from smaller regional airports close to its warehouses across the country, allowing the Seattle-based company to move inventory quickly to enable delivery in one or two days.

The company’s ultimate goal has baffled industry experts, who have written conflicting reports about Amazon’s ambitions. Rapid growth in the early years and a $1.5 billion investment in a hub at Cincinnati/Northern Kentucky International Airport fueled speculation that the company was evolving into an overnight parcel service. Other investors said Amazon remains far from larger airlines like FedEx and UPS, which have more planes and more flight connections that don’t overlap with Amazon’s core online retail business.

Also Read:  Silk Way West Airlines Signs Air Cargo Transport Memorandum with Nippon Express

Demand for air freight has cooled this year and is expected to decline again in 2023. IATA, an airline trade group, forecasts the industry will generate $149.4 billion in revenue, about $52 billion less than in 2022 but still $48.6 billion more than in 2019.

According to researchers at DePaul University’s Chaddick Institute for Metropolitan Development, who have been tracking Amazon Air flights since 2020, Amazon flights grew in September at the slowest rate since the start of the pandemic.

Despite declining demand, Amazon announced in October that it would add 10 Airbus A330-300 freighters starting next year through a partnership with Hawaiian Airlines. Amazon also plans to downsize its fleet by not renewing some aircraft leases with Air Transport Services Group, two of the people said.

Even the largest parcel carriers are tightening ties as consumers resume pre-pandemic spending patterns, easing pressure on the shipping industry. FedEx on Dec. 20 unveiled plans to cut $3.7 billion in spending next year, with the cost savings including using digital tools to rebalance flights between the company’s jets and third-party operator lifts.

Amazon offers space on its planes and charter flights, one of the people said. The effort is the latest maneuver to address slowing online sales and a fragile economy that could be on the brink of recession, including subletting excess warehouse space and cutting an estimated 10,000 jobs.

Leave a Reply

Your email address will not be published. Required fields are marked *