Shulou(Shulou.com)11/24 Report--

Amazon has been trying to sell extra capacity for cargo planes as consumer demand cools, according to people familiar with the matter, in the company's latest effort to adapt to slowing online consumer demand growth.

Amazon has about 100 cargo planes in the U.S. and European markets. In recent months, the company has hired executives with airline cargo marketing experience. The latest plans include filling empty cargo flights returning from Hawaii and Alaska with fresh produce such as pineapples and salmon, according to two people familiar with the matter. An Amazon spokeswoman declined to comment on the plans.

Amazon's long-term plans for air freight haven't changed despite the current cooling in consumer demand, one of the people said on condition of anonymity. Another person said Amazon was under increasing pressure to make money by selling excess air cargo capacity as it looked to continue to boost profits at a time when revenue growth slowed.

Amazon launched its own air cargo service, amazon air, in 2016, fueling speculation that amazon would eventually build an overnight nationwide delivery network like rivals UPS and fedex. Amazon Airlines typically operates at small regional airports around the United States near Amazon warehouses, helping companies quickly move inventory to meet same-and next-day delivery needs.

Industry experts, who have written conflicting reports on Amazon's growth, also don't understand Amazon's long-term goals. Amazon's rapid growth in its early years and its $1.5 billion investment in the Cincinnati/Northern Kentucky International Airport hub have led to speculation that Amazon wants to become a major courier to compete with UPS and FedEx. Other investors say Amazon's core business remains online retail, and Amazon Air's business scope avoids big freight companies such as FedEx and UPS, which have more cargo planes and flights, without overlap.

Air cargo demand has declined this year and is expected to continue to stabilize in 2023. The International Air Transport Association (IATA) expects industry sales to reach $149.4 billion next year, about $52 billion less than in 2022 but still $48.6 billion more than in 2019.

Since 2020, researchers at DePaul University's Chadwick Institute for Urban Development have been monitoring Amazon Airlines 'flight operations. Amazon flights grew at their slowest pace in nearly three years in September, they said.

Despite the slowdown in demand, Amazon announced in October that it plans to partner with Hawaiian Airlines to add 10 Airbus A330-300 freighters starting next year. But two people familiar with the matter said Amazon planned to reduce its fleet and not renew some of Air Transport Services Group's aircraft leases.

Even the biggest express carriers are retrenching as consumers resume offline spending habits, putting pressure on the shipping industry. On Dec. 20, FedEx announced plans to cut $3.7 billion in spending next year, including using digital tools to rebalance its own aircraft and cargo flights from third-party carriers.

Amazon is marketing excess capacity on its cargo planes, one of the people said, in the latest move by Amazon to combat slowing online sales. Amazon has already begun subletting excess warehouse space and announced the elimination of about 10,000 jobs.

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