An Amazon-branded Boeing 767 freighter, nicknamed Amazon One, flies over Lake Washington during the Seattle Seafair Air Show on August 5, 2016 in Seattle.
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one of AmazonLeading US air cargo operators on Monday said the e-commerce giant is slashing flights this year citing low demand and slow economic growth.
Air Transport Services Groupwhich runs a significant portion of Amazon’s air cargo fleet, said it expects to work boeing The 767 freighters are dedicated to servicing Amazon and DHL on short schedules and short flight times per aircraft.
“Both companies are adjusting their ground and air distribution and fulfillment networks in the United States in line with lower US economic growth and consumer spending levels in the first half of 2023,” ATSG said.
Air cargo rates, which have risen in recent years due to port congestion and high demand for faster delivery, have declined. The Baltic Air Freight Index was down more than 33% on January 30 from a year ago. The International Air Transport Association said last month that air cargo demand in November was down about 14% from the year-ago period, while capacity fell 1.9%.
Meanwhile, passenger airlines have said demand for travel has increased as consumers prioritize visits and other experiences.
But after Amazon’s weakest year for growth in its quarter century as a public company, CEO Andy Jassy has taken steps to reduce expenses. This includes cutting more than 18,000 jobs, halting expansion of warehouses and closing some projects.
Amazon built up its fulfillment and logistics network at a frantic pace during the COVID pandemic as e-commerce demand surged. Since then, rising inflation and a slowdown in consumer spending have forced Amazon to downsize. Bloomberg reported last December that the company weighed selling extra space on its cargo planes to other airlines.
The ATSG said on Monday that Amazon may not extend its lease on five Boeing 767-200 freighters, which are due to expire between May and September. Amazon has an option to continue leasing the four 767-200s through 2024, it added.
Shares of ATSG were down 9% in afternoon trading. Amazon shares fell nearly 1%. Representatives for both companies did not immediately respond to a request for comment.
Amazon hired Hawaiian Airlines to fly large, leased Airbus cargo jets in October and said it would retire some of the older planes.
Through Amazon Air, the company has built a growing air network to control more aspects of the delivery process and ensure faster deliveries. It invested in ATSG and Atlas Air Worldwide Holdings, although Atlas agreed to be taken private by an investor group last year. Amazon also tied up with passenger airline sun country To provide crew and aircraft to fly the package. The e-retailer usually charges freight from its air contractors, but has also bought used jets Delta and WestJet.
In addition to Amazon and DHL reducing their air cargo schedules, delivery giants FedEx, Has also announced cost cuts that include parking aircraft and cutting some corporate jobs.
Watch: How the Pandemic Changed How Boeing and Airlines Think About Air Cargo
