MIAMI BEACH, Fla. – The executive in charge of Amazon’s new air cargo service for third-party shippers reassured freight forwarders their cargo won’t be bumped from overloaded flights to preserve space for Amazon (NASDAQ: AMZN) parcels, because the retail giant has the technology and network density to ensure shipments reach their destination on time by whatever mode necessary.
“From an air perspective, we have both a hub-and-spoke and point-to-point [operation]. But we also have a ground transportation network, both road and rail, that is the densest in the United States. That gives us a ton of options. And when you pair that with real-time dynamic routing that can send Amazon customers packages by millions of different route combinations, we can make real-time capacity adjustments,” said Tom Bradley, general manager of Amazon Air Cargo, at The International Air Cargo Association’s trade show here.
“So we very, very rarely ever have to choose between an Amazon package and an air cargo package because of that density, because of that flexibility. If a customer needs a particular product, we can choose from hundreds of our independent freight contractors with different transportation combinations and we can both provide a superfast, reliable delivery service for the Amazon customer and we can accept that Amazon air cargo volume,” Bradley said Tuesday during a panel discussion about the air cargo market.
His remarks came less than two months after Amazon fully commercialized a wholesale air cargo service it had been quietly developing for years. The comments were designed to counter shippers’ perceptions that highly integrated parcel carriers, including FedEx and UPS, tend to favor their own express shipments when capacity is constrained on flights.
The e-commerce behemoth in September unveiled the Amazon Air Cargo website as a vehicle for advertising the airfreight product and booking shipments online. Shippers can tender freight as needed, reserve regular blocks of space or charter entire aircraft. Amazon is also offering air cargo service in Europe and India, where it operates more limited networks.
Kuehne+Nagel, the world’s largest freight management company, recently described how it is using Amazon Air Cargo from Hawaii to relay e-commerce shipments from China to the U.S. mainland.
The TIACA event was a coming-out party for Amazon Air’s new status as a for-hire cargo airline in the U.S., Europe and India. Amazon Air Cargo banners and signs greeted attendees at the entrance to the Miami Beach Convention Center and in the hall. Amazon’s air logistics group also rented a suite where it held private meetings with prospective customers over three days this week.
“Our service levels for Amazon Air Cargo are going to be what we stand by. And when you sign a contract with us, we will make sure that your inventory flies,” Bradley promised.
Amazon Air also recently joined the Airforwarders Association, Executive Director Brandon Fried told FreightWaves. Forwarders like capacity and choice, “and the more we have the better,” he said of Amazon’s entry into the domestic cargo market.
Amazon has the tools to make sure third-party freight doesn’t get left on the ground, said Derek Lossing, an e-commerce logistics expert and head of Cirrus Global Advisors, in an interview.
“There’s already a reputation in the industry that there’s risk with booking with the DHLs and FedExes of the world for air cargo. And that risk is real,” Lossing said. “The integrators have invested a lot of time, energy and resources forecasting, trying to understand how many small packages are going to be on a daily departure, and really understanding what cargo capacity they should be selling.
“If they go into this and don’t reserve space, and they’re taking bookings and that cargo sits for one or two days and they’re not able to dynamically manage their capacity, they’ll lose trust, and ultimately, their product won’t be successful. Amazon just has to get that right, straight out of the gates. But they should be able to.”
Amazon established its air logistics arm in 2016 to meet delivery commitments of one to two days for Prime members and delight customers. The company has about 100 aircraft in its fleet operated by partner airlines under long-term contracts. It also operates several air sortation hubs and more than 250 daily flights in a route network that connects 54 U.S. airports.
Most of the cargo jets are Boeing 767 converted freighters. Amazon’s air logistics arm also deploys six Airbus A330 converted freighters, which are younger and larger airframes than the 767s, and more than two dozen Boeing 737-800 narrowbody freighters. Amazon expects to receive four more A330s from an aircraft leasing firm by the spring.
Bradley said Amazon’s fleet strategy is to reduce the age of the fleet by bringing in younger planes that are more reliable and generate lower emissions. The A330s, for example, are replacing older Boeing 767-200 freighters and have a slightly better range and payload. Amazon has returned several aging 767-200s to its largest lessor in the past 18 months.
“The focus is on reducing the age of the fleet so we can drive higher service levels for our customers, both Amazon customers and Amazon Air Cargo customers,” the general manager said.
There are no plans to grow the fleet any larger, but Amazon is always ready to adjust to changing market conditions or its own needs, he added.
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