The air cargo market has been fairly volatile over the course of the coronavirus pandemic. A survey by Resilience360 and Business Continuity Institute found 37% of shippers had seen air transport disrupted by the pandemic, which is the highest rate among freight modes.
Overall, air cargo volume is down compared to 2019. But capacity is down more as a result of the sharp decrease in passenger flights, meaning pricing on the spot market have remained elevated compared to last year. This means those still looking for capacity are fighting for the little space that’s left on the market. E-commerce merchants are in the thick of that fight.
“The large Asia-North America trade route was particularly robust, driven by demand for e-commerce and goods manufactured in Asia,” the International Air Transport Association wrote in its release on Q3 air cargo after noting that overall volume fell nearly 17% YoY.
The airline operators that Amazon contracts with have benefited. Atlas Air said it expects a strong peak season, due to the shipment of consumer products and e-commerce, executives told analysts last month.
Having more planes means Amazon Air doesn’t have to rely solely on the market to provide the capacity it needs to move its inventory.
The report does note that analysts told the researchers “a significant amount of cargo may move on planes not registered to Amazon Air, particularly on international routes.”
And the DePaul researchers expect the expansion of Amazon to continue at “a pace similar to this year” going into 2021.
“By the end of 2021, Amazon Air could cross the 200-flights-a-day threshold, making it about twice the size it was in early 2020,” the report concludes. “With only a modest increase in fleet utilization, this will require about 74 – 75 airplanes, which the airline is on track to achieve.”
As Amazon experienced a surge in orders through the pandemic, it had to throw in the towel on one-day shipping guarantees. The company said that, to get back to that point, it will prioritize safety first and then address the need for additional capacity.
The second priority for Amazon “is capacity expansion, especially as we head into the second half of the year, which generally sees a step-up in volume even over the first half of the year,” Amazon CFO Brian Olsavsky told analysts in July.
Along with flying more planes, Amazon also plans to open 100 operations facilities in September, including fulfillment centers, delivery stations and sortation centers, it announced Monday.
