Putzger perspective: Amazon’s freighter future

Source: Amazon

In his latest monthly column, Ian Putzger takes a look at how Amazon continues to suck up freighter capacity.

The relentless demand for airfreight capacity is keeping freighter operators at lofty heights for some time to come. Predictions of congested networks now extend well beyond the 2021 Lunar New Year, if not into summer.

Planes are full and yields at record levels. If carriers could lay their hands on more cargo planes, they could fill these without much effort. Unfortunately those pesky e-commerce outfits, led by Amazon, keep getting in the way in the scramble for freighters.

According to the latest report from the Chaddick Institute at DePaul University, Amazon’s freighter fleet (the planes in its own colours, not those operated by the likes of ABX Air and ATI) has grown by 24 planes to 73 units. On average it runs 163.5 flights a day, up from 140.2 back in February. The authors predict that by January the e-commerce giant’s fleet will exceed 80 aircraft, operating more than 180 flights a day.

That’s a lot of capacity, which does not come cheap, and the fuel costs are not helping. In addition, there is the Amazon hub at Cincinnati, which opened this year. It cost $1.5bn, one of the company’s biggest outlays in logistics.

Amazon has deep pockets, but its logistics spend is eye-watering. Last year it spent $61.1bn in this arena, up from $37.9bn in 2019, and the numbers keep rising. In the first half of this year Amazon spent 42% more on logistics than in the same period in 2020.

The company is notoriously tight-lipped about its logistics activities and costs, but you can bet management is not smiling at those numbers. Already last year its rise in shipping costs outstripped the growth in online stores and third-party sales, so the amount Amazon had to spend on fulfilling every order was up.

When will Amazon begin to offer its unused capacity to the market? The rates it could charge are tempting. Looked at from the forwarder perspective, in the US Amazon Air now flies to 42 airports that are within 100 miles of 70% of the US population, and it avoids the congested airfreight gateways like Chicago, where it takes days to retrieve cargo from airfreight sheds.

On the ground Amazon has made moves to carry stuff for third parties, and observers predict it will offer logistics as a service in North America within 18 months, if not sooner.

Share this story

Related Topics

Latest monthly exclusive news

Rotate goes 360 in the air cargo data space

Rotate is focusing on rapid product development and tackling real air cargo industry issues with practical solutions. Data, software, and…

Read More

Share this story

Recovering transpacific market needs more lift

Capacity growth on the transpacific trade lane needs to continue to match a recent surge in e-commerce volumes. An unexpected…

Read More

Share this story

Are wholesale UK airport slot allocation reform changes necessary?

The UK Government’s consultation on proposals to reform the airport slot allocation system closed in early March and while undoubtedly…

Read More

Share this story