Amazon wants to sell excess shipping space as revenue slows

Amazon.com is trying to sell excess space on its cargo planes, according to people familiar with the matter, its latest effort to cope with slowing growth in online sales .

Amazon has about 100 planes in the United States and Europe . In recent months, the e-commerce giant has hired several executives with experience in airline cargo management . According to two of the people familiar with the matter, it is possible to fill planes flying between Hawaii and Alaska with pineapples and salmon. An Amazon spokesperson declined to comment .

Another person familiar with the matter said that as Amazon's revenue growth slows , it is urgent to improve profit margins elsewhere , so making full use of the extra space on cargo planes has become an issue that Amazon needs to solve as soon as possible .

Amazon launched its air cargo service in 2016, fueling speculation that it would eventually create an overnight delivery network to compete with United Parcel Service Inc and FedEx Corp.

Still, some investors say Amazon still lags far behind larger carriers such as FedEx and United Parcel Service , which have more planes and more flights.

Demand for air cargo has cooled this year and is expected to fall again in 2023. The International Air Transport Association (IATA), the airline industry trade group , expects the industry to have sales of $149.4 billion next year , $52 billion less than in 2022 but still $48.6 billion more than in 2019.

Amazon's September flight growth was the slowest since the pandemic began, said researchers at DePaul University's Chaddick Institute for Metropolitan Development, who have been monitoring Amazon Air flight volume since 2020 .

Despite the slowdown in demand, Amazon announced in October that it would add 10 Airbus A330-300 freighters starting next year through a partnership with Hawaiian Airlines.

Even the largest package delivery companies are tightening their belts as consumers slowly return to pre-pandemic spending habits. FedEx on Dec. 20 unveiled plans to cut $3.7 billion in expenses next year, with cost cuts including rebalancing flights between company-owned aircraft and freighters operated by third-party operators .

In addition to selling excess space on cargo planes, Amazon has made many efforts to cope with the slowdown in online sales , including subletting excess warehouse space and cutting about 10,000 jobs. It is unknown whether Amazon's financial situation will improve next year under this series of operations.

Amazon

Air Cargo