Amazon.com Inc. (NASDAQ: AMZN) inches up in pre trading session on Monday as people with knowledge of the situation claim that the company is attempting to sell any extra cargo capacity on its cargo flights as part of its most recent move to transition from a rapid pandemic-era expansion to a pause in online development.
The e-commerce store recently hired executives with expertise selling cargo space for airlines. The company has a fleet of around 100 planes in the US and Europe. According to two of the persons, possibilities include loading fish and pineapples into empty aircraft coming from Hawaii and Alaska. A representative for Amazon chose not to comment on the proposals.
Despite the present upheaval, the long-term strategy for Amazon Air hasn’t altered, according to one of the sources, who wanted to remain anonymous because the conversations are private. Another source claimed that the corporation is under more pressure to increase profits during a time of slower sales development and to profit from the empty space on its planes.
When Amazon announced its air cargo service in 2016, there was anticipation that the company might eventually build an overnight delivery network to compete with FedEx Corp. and United Parcel Service Inc. In order to move merchandise rapidly and provide one- and two-day delivery, Amazon Air uses smaller regional airports adjacent to its facilities around the nation.
Industry analysts are perplexed by the company’s ultimate purpose after reading contradicting information regarding Amazon’s plans. Early on, the firm saw rapid expansion, and a $1.5 billion investment in a hub at Cincinnati/Northern Kentucky International Airport sparked rumors that it was preparing to become an overnight delivery service. Other investors claimed that despite having more planes and flight connections that don’t interfere with Amazon’s primary online retail operation, major airlines like FedEx and UPS still outpace Amazon by a wide margin.
Researchers with DePaul University’s Chaddick Institute for Metropolitan Development have been tracking Amazon Air flights since 2020, and they found that in September, they expanded at their slowest rate since the outbreak began.
Despite waning demand, Amazon revealed in October that it will collaborate with Hawaiian Airlines to acquire 10 Airbus A330-300 freighters beginning in 2019. According to two of the sources, Amazon intends to reduce its fleet by not renewing some of its aircraft leases with Air Transport Services Group.
As customers return to their pre-pandemic buying patterns, even the biggest package carriers are cutting costs, relieving pressure on the shipping sector. On December 20, FedEx disclosed intentions to reduce spending by $3.7 billion in 2019. Among the cost-cutting measures are the use of digital technologies to rebalance flights between company-owned aircraft and lifts from third-party operators.
According to one of the persons, Amazon is giving space on its aircraft as well as charter flights. The initiative, which involves subletting extra warehouse space and axing 10,000 jobs, is the most recent move to address sluggish internet sales and a shaky economy that may be headed for recession.