Amazon buckles under e-commerce changes

E-commerce giant Amazon is feeling the strain of changing e-commerce consumer habits, reducing its workforce and selling additional airfreight capacity as demand slows. Amazon is letting go of 18,000 employees, or about 1% of its workforce, the largest slash in the company’s history. Personnel were cut from the company’s retail division and human resources, including recruiting. Job cuts began in 2022, according to a Nov. 4 memo from Amazon Chief Executive Andy Jassy. Amazon also froze some of its expansion plans — delaying warehouse openings and halting retail group hires — as shoppers returned to pre-pandemic trends with e-commerce spending. The e-tailer started looking to market its excess air cargo space in December, Bloomberg reported, demonstrating lower e-commerce volumes in the market. Amazon has also invested in regional airport facilities in the U.S., bypassing larger, more congested cargo hubs in favor of more space to grow its footprint . Amazon is the fourth-largest customer for aircraft capacity behind FedEx, UPS and DHL Express, according to Cargo Facts Consulting’s Global E-Commerce Logistics Outlook for 2021. In 2019, Amazon was its own largest carrier and the company flew a fleet of around 100 aircraft by the end of 2022. However, the e-commerce giant is still heavily tied to UPS for its shipping, with about 18.4% of global shipping spent in 2020 with UPS, generating about $11.4 billion in revenue for UPS, according to Air Cargo World ’s sister publication Cargo Facts Consulting . E-commerce trends In the e-commerce space, fulfillment costs have been rising higher than revenues due to the shift in service offerings by platform providers, like offering same-day or two-day shipping. [caption id="attachment_57133493" align="aligncenter" width="997"] Photo / Cargo Facts Consulting[/caption] Amazon has, in turn, invested heavily into its fulfillment and shipping capabilities, hoping a larger network will increase profitability, “but the constant growth and capital expenditure have many wondering how long this is sustainable,” according to Cargo Facts Consulting. E-commerce volumes inflated an otherwise slowing airfreight market demand in 2022, but fell lower than 2021, indicating a shift in consumer habits.

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