Amazon Air slows expansion as e-commerce demand flattens
21 / 09 / 2022
By Rebecca Jeffrey
Amazon's fleet of leased or outright owned freighters is growing. Photo by Dave Lindberg
Amazon Air has “greatly reduced” its overall rate of expansion since March in response to a slowdown in e-commerce sales figures, according to new research.
Total Amazon Air flight activity grew by 3.8% between August 2021 and March 2022, compared to 14.3% during the previous six months, found researchers at Chaddick Institute of Metropolitan Development at DePaul University in Chicago.
“The slowdown reflects Amazon’s move to slow the rate of facility expansion, the flattening trajectory of online sales, and softer demand for air-cargo services in general,” said the institute’s research report.
“The reported size of Amazon Air’s fleet remained at 87 to 88 planes for most of the period from March to September, although several planes appear to be imminent.”
Amazon Air, which has invested heavily in its operations in recent years, grew from 187 flights per day in March 2022 to 194 flights in September. Its growth over the past year has been around 18.4%.
Partner flights also appear to have stayed about the same, said the research.
The report also found the company has scaled back plans for facilities and warehouses and reduced its existing stock, a distinct change from its previous “overly optimistic estimates” though concerns about a slow Christmas season may be the reason for some of the reductions, said the report.
Despite a downturn in its overall expansion, Amazon Air is heavily expanding at CVG.
This investment has boosted average Amazon Air activity there from 26 to 44 flights daily, a 71% increase.
There are also now more night-time flights that have positioned the airline to deliver “more next-day fulfilment from its vast warehouse network in Kentucky, Indiana, and Ohio.
However, in July, it said plans to develop air cargo facilities at Newark Liberty International Airport in New Jersey had been scrapped.
Amazon Air is prioritising growth in Europe, particularly in Leipzig and Milan, and partner-flight activity in Europe remains extensive, found the report.
Intra-European Amazon Air flights grew from 36 to 44 daily between March and this month, not including partner flights.
Since March, Amazon Air has also added three US airports to its network: El Paso, Texas; Las Vegas, Nevada; and Lihue, Hawaii.
Amazon Air’s expanding capabilities at CVG augment “Buy with Prime,” a programme announced in April that allows merchants to offer fast and free delivery to Amazon Prime members, said the research.
The report concluded that: “Amazon’s CVG hub has moved notably in the direction of becoming a large-scale and night time operation akin to that of FedEx’s and UPS’s largest hubs.
“At the same time, its operations remain much more decentralised than its competitors.”
Through the rest of this year and early 2023, the institute expects a resumption in the growth of Amazon Air’s fleet, with the possible addition of 7-9 planes by March 2023, but said it no longer expects its fleet to surpass 100 by the end of this year.
The institute also expects further development of night-time operations at CVG and at other hubs and the development of an expansive network of “overnight” flights in Europe, mirroring the overnight network developing in the US.
It added that while it doesn’t anticipate Amazon entering the consumer-to-consumer segment in the near future, it does expect the company to grow its share of the delivery business being handled by FedEx, UPS, and the US Postal Service “that does not involve purchases on its online platform, in part due to rollout of Buy with Prime and Fulfillment by Amazon”.
In February this year, Air Cargo News reported that Amazon is looking to ramp up its freight forwarding business.
FedEx has also recently announced cost reduction initiatives.