Amazon Cutting Back on Airfreight Foray

Amazon Cutting Back on Airfreight Foray

One of Amazon’s key air cargo operators has said e-commerce giant Amazon is scaling back on flights this year, citing lower demand and slower economic growth.

Air Transport Services Group (ATSG), which runs a significant portion of Amazon’s air cargo fleet, said it expects to operate Boeing 767 freighters dedicated to servicing Amazon and DHL at reduced schedules and less flight time per aircraft.

“Both companies are adjusting their ground and air distribution and fulfillment networks in the United States to conform to reduced US economic growth and consumer spending levels in the first half of 2023,” ATSG said.

Air cargo rates, which surged in recent years due to port congestion and high demand for fast deliveries, have slumped. The Baltic Air Freight Index was down more than 33 per cent on January 30 from a year earlier.

The International Air Transport Association said last month that air cargo demand in November was down nearly 14 per cent from the year-ago period, while capacity fell 1.9 per cent.

Meanwhile, passenger airlines have said travel demand has held up as consumers prioritize trips and other experiences.

Coming off Amazon’s weakest year for growth in its quarter century as a public company, CEO Andy Jassy has taken steps to curtail expenses. That includes cutting more than 18,000 jobs, pausing warehouse expansion and shuttering some projects.

Amazon built out its fulfillment and logistics network at a frenzied pace during the Covid pandemic, as demand for e-commerce surged. Since then, rising inflation and a slowdown in consumer spending has forced Amazon to downsize. The company has weighed selling excess space on its cargo planes to other airlines, Bloomberg reported last December.

ATSG said Amazon may not extend its leases on five Boeing 767-200 freighters, which are due to expire between May and September. Amazon opted to continue leasing four 767-200s into 2024, it added.

In addition to Amazon and DHL reducing their air cargo schedules, delivery giant FedEx has also announced cost-cuts that include parking planes and cutting some corporate jobs.