Amazon Air takes its foot off the expansion accelerator as the market slows

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Amazon has significantly scaled back its operations in Cologne-Bonn © Tobias Arhelger

In another sign that e-commerce is stalling, Amazon Air’s fleet and network growth has slowed significantly over the past six months.

The e-commerce giant has already taken steps to reduce its warehouse footprint to accommodate a slower-than-expected market.

After a disastrous summer, FedEx is reducing flight frequencies and temporarily parking planes, but Amazon Air has not scaled back its flight operations, though momentum has clearly slowed.

According to DePaul University’s Chaddick Institute for Metropolitan Development, which has been tracking developments in tAmazon’s cargo arm, its flight activity between March and September grew just 3.8%, sharply below the pace of 14 .3% registered between last October and March.

Amazon Air has been operating 194 flights a day, up from 187 in March. During the period, its fleet of 767 and 737 freighters has remained static, at 77/78.

“Amazon has taken its foot off the gas,” said Joseph Schwieterman, a professor of utility management and director of the Chaddick Institute.

On the ground, it actually backtracked this summer, canceling warehouse projects and closing some facilities, and in July walked away of plans for a $432 million air hub at Newark Liberty International Airport.

While air activities have not slowed down, the anticipated move to transpacific flights seems further away than ever. With trans-Pacific flows from Asia in decline, such a move is highly unlikely, especially as Amazon has been struggling to contain logistics costs, which rose 25.5% last year. For the second quarter, Amazon posted a net deficit of $2 billion.

Amazon Air operations have grown in some places and retreated in others, Schwieterman noted. They increased in Europe, Florida, and the US mountain states, while they decreased in other hotspots like Seattle, Portland, and Cologne.

The German airport saw a drop in average daily flights from 5.8 to 0.9. On the other hand, daily flights in Leipzig increased from 3.2 to eight. In Milan, they increased from 3.2 to nine. Schwieterman sees these two as emerging focal points in the company’s developing European network, where he anticipates further expansion.

The new flights in the US (El Paso and Las Vegas) were designed to fill gaps in market coverage and have now put 73% of the US population within 100 miles of a airport serviced by Amazon Air.

However, the biggest expansion in the US was at Cincinnati-North Kentucky Airport (CVG), which saw a 71% growth in flight activity, from 26 daily flights to 44. Including airline flights contractors, the activity is now 60 flights. one day.

The CVG cluster and nearby Wilmington now account for 21% of Amazon Air’s flights, up from 14% six months ago, indicating this is emerging as a true hub for the company. Cincinnati is also the North American hub for DHL, which has been working with Amazon.

Schwieterman sees an impetus for CVG’s rise: Amazon’s move in April to court third-party package traffic by offering merchants who don’t sell on Amazon’s platform use of its free overnight delivery and returns to third-party packages. subscribers of its Prime program. This positions Amazon as more of a competitor to FedEx and UPS for third-party package shipments, he believes.

CVG is looking more and more like an integrating hub, bolstered by the addition of a set of late-night arrivals and after-midnight departures that have facilitated transfers between aircraft. This also positions Amazon for overnight delivery from its network of warehouses in Indiana, Kentucky and Ohio.

However, none of Amazon’s moves suggest a push to establish morning deliveries, signaling that it’s not targeting the B2B market, at least not yet.

Schwieterman expects further expansion at CVG, with at least six more overnight flights there in the next six months.

While network adjustments over the past six months indicate that Amazon has adapted to the market downturn, it still sees room for future expansion.

“Long-term growth still looks solid,” he said.

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