Amazon scales back air cargo service as demand falls: Report
ATSG informed on Monday that Amazon may not extend its leases on five Boeing 767-200 freighters, which are set to expire between May and September this year
The Air Transport Services Group (ATSG), one of the key operators of the Amazon Air cargo fleet, notified CNBC on Monday that the company is reducing flights this year due to decline in demand. Amazon developed its fulfillment and logistics network at a frenzied rate during the COVID-19 pandemic due to the surge in e-commerce. But increasing inflation and decline in consumer spending has forced the e-commerce giant to reduce its footprint in the sector.
The ATSG has stated that it would operate Boeing 767 freighters, committed to servicing Amazon and DHL at decreased schedules and less flight time per airplane. ATSG said, “Both companies are adjusting their ground and air distribution and fulfillment networks in the United States to conform to reduced U.S. economic growth and consumer spending levels in the first half of 2023.”
The air cargo rates had increased in recent years because of port congestion and increased demand for faster deliveries. However, now these rates have dropped. The Baltic Air Freight Index dropped by more than 33 percent on 30 January compared to the year ago period. Last month, the International Air Transport Association stated that the air cargo demand in November declined by nearly 14 percent from the year-ago period, while capacity went down by 1.9 percent.
ATSG informed on Monday that Amazon’s leases on five Boeing 767-200 freighters, which are going to expire between May and September, may not get extended. It added that Amazon chose to continue leasing four 767-200s into 2024.
In December 2022, the media outlets had reported that Amazon is looking to sell excess space on its cargo airplanes in its effort to adjust from rapid growth during the pandemic to a slowdown in online growth. The e-commerce retailer has a fleet of nearly 100 planes in the United States and Europe. Amazon started its air cargo service in 2016. It handles smaller regional airports in the vicinity of its warehouses in the US.
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