Amazon’s network grows despite soaring shipping costs

Amazon spent $76.7 billion on shipping in 2021, an increase of more than 25% compared with 2020. The growth rate fell 60% between 2019-2020, but Amazon said that it anticipates total shipping spend to continue to increase significantly in the coming years as consumers select more expensive same- and next-day shipping options. The company hints that it will continue investing in its distribution network and negotiate better terms with suppliers to counter increased shipping costs. Although the retailer is reporting a nearly $25 billion operating income, its international division finished 2021 with a loss of $924 million. The loss in 2021 follows $717 million in income in 2020. Amazon said this is primarily due to increased shipping and fulfillment costs from carrier increases and further investment in its network. The company appears confident that efficiencies from its larger network will lead it to profitability, but the constant growth and capital expenditure have many wondering how long this is sustainable. The chart below shows the development of fulfillment and shipping expenses versus North American and international revenue: Network operations Amazon networks in North America and Europe operate an estimated 263 flights daily. Since our last article in March 2021, we have seen a rapid expansion in the U.S. as well as the introduction of a designated network in Canada. US Network The U.S. has seen the addition of ten airports since March 2021: Albuquerque International Sunport (ABQ), Nashville International Airport (BNA), Spokane International Airport (GEG), Wichita Dwight D. Eisenhower National Airport (ICT), Kona International Airport (KOA), Lihue Airport (LIH), Kansas City International Airport (MCI), Eppley Airfield (OMA), Pittsburgh International Airport (PIT) and San Bernardino International Airport (SBD). The next airport in the works is Boise Airport (BOI). Due to its location, we speculate that BOI may be integrated into the network through flights to and from Alaska, similar to what we have seen with Spokane (GEG). Cargo Facts Consulting also finds it interesting that Amazon is operating flights to four Hawaiian destinations (KOA, LIH, HNL and OGG). This surely had a positive impact on the service level received by customers in the Hawaiian market. Operations at SBD commenced on April 28, 2021. SBD is home to Amazon's nearly 660,000-square-foot sorting facility that acts as a major hub for operations. According to Flightradar24, Fort Worth Alliance Airport (AFW) has surpassed Cincinnati/Northern Kentucky International Airport (CVG) with the highest number of daily flights, which is likely driven by Silver Airways ATR operations centered out of AFW but also due to operations out of Dallas/Fort Worth International Airport (DFW), which is only 15 miles away. Another notable airport that appears to have been recently removed from the network is Newark Liberty International Airport (EWR). Canada Network In Amazon's Canadian network, Cargojet operates two 767s (MSN 25363 and MSN 25576) on behalf of Amazon between Calgary International Airport (YYC), Edmonton International Airport (YEG), John C. Munro Hamilton International Airport (YHM) and Vancouver International Airport (YVR). Europe Network Expansion in Europe has also been significant. The European network seems to be a bit harder to narrow down as some aircraft appear to be flying for Amazon as well as other customers. The following interactive display contains four pages with a panel in each: Network map Total aircraft by operator Daily departures by airport Current fleet At the time of writing, Cargo Facts Consulting's records show ninety-two active aircraft in the U.S., two active aircraft in Canada, and an additional twelve aircraft in Europe. ATI continues to be the largest operator for Amazon with forty-two aircraft (thirty-two 767-300BDSFs, two 767-300BCFs and eight 767-200BDSFs). Atlas is the second-largest operator with twenty-seven total aircraft (fourteen 767-300BDSFs, five 767-300BCFs and five 737-800BCFs). On November 17, 2021, Atlas moved the eight 737-800BCFs from Southern Air's AOC to Atlas' AOC. In Europe, ASL Airlines Ireland currently operates nine 737-400SFs and six 737-800BCFs, while ASL France operates one 737-400SF. We have seen some discrepancies in the European network; it appears that some aircraft may regularly move between Amazon's network and some of the postal networks. In December 2021, we saw four aircraft added to Amazon's network: N251AZ (MSN 29604) joined ATI on Dec. 9; EI-AZD (MSN 30284) joined ASL Airlines Ireland on Dec. 12; N947AZ (MSN 682) joined Silver Airways on Dec. 20; and N569AZ (25246) joined ATI on Dec. 24. Amazon Fleet Outlook N641AZ (MSN 30595) has been parked at ILN since Jan. 16 and we expect it to enter service soon; an operator has yet to be named. Cargo Facts Consulting also sees two aircraft in conversion at MEX: N1612T (30575) was ferried to MEX on Jan. 27, 2021, and N607AZ (MSN 30573) on Jan. 9, 2022. Amazon has an additional three aircraft parked: N1613B (MSN 32776), N1607B (MSN 30388) and N1609 (MSN 30574) , which we assume are waiting for conversion slots. These aircraft are the last of the aircraft purchased from WestJet and Delta Airlines. After they enter service we will wait and see what Amazon's next move is.

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