In APR20, CargoForwarder Global published an article titled “Take-off in times of ShutDown? Amazon Air goes Leipzig”.
Now, just three-and-a-half years later, Amazon’s air freight operations in Leipzig appear to already be past their prime. Its own shutdown is imminent – at least on the air freight front.
While over in the U.S., Amazon is all over the news facing an antitrust lawsuit with accusations of monopolistic activities, in Germany the papers are full of the news that the company is closing down its Air Freight Center at Leipzig Airport. Around 400 jobs are at stake, with an insider disclosing 13NOV23 as the cut-off date to CargoForwarder Global. The contact confirmed that the news has come as a surprise given the operation’s size, though said that “they [Amazon] have been scaling back for a few months, moving a lot more to road than air. Some gateways have turned to road only with air at other locations reduced significantly.” Until now, Amazon Air operated two Boeing 737-800 freighters out of the airport.
eCommerce Musical Chairs?
A look at the Cargo Events tab on the Mitteldeutsche Flughafen AG website, shows the company having a stand at Germany’s leading real estate exhibition next week: the Expo Real 2023 on 04-05OCT23. So, the news has come just in time for them to be able to possibly promote a pretty large ex-Amazon space at Germany’s second-largest cargo airport. Will Cainiao move in, perhaps, to enhance its Liège operations just 6 hours’ drive away, and take another step closer to its goal of 72-hour Europe delivery? After all, the Amazon Air Freight Center was specifically constructed to efficiently handle e-commerce business.
Mitteldeutsche Flughafen AG statement
CargoForwarder Global reached out to Leipzig/Halle Airport’s operator for a statement on the latest developments, and what the air cargo shutdown means in terms of flight numbers. Here is the answer: “Amazon Air's decision also creates an opportunity for Leipzig/Halle Airport. Amazon Air had established its first regional air freight center in Europe at the airport. Due to the change in strategy that has been announced, which is geared towards using alternative transport solutions, we are losing a customer, but we are gaining a very attractive site that has direct access to the apron area and we can now market this space. This opens up new potential for developing the airport as Europe's third-largest cargo facility in the long term. Shortly after Amazon Air had announced its decision, we already received the first enquiries from parties that are potentially interested in using this space. This underlines the attractiveness of the airport and makes us optimistic as we face the future.
Leipzig/Halle Airport registers about 1,300 cargo flights per week; roughly 30 of them were operated by Amazon Air.”
400 jobs affected
In the interim, however, the news is a blow for many in the region. 400 redundancies mean 400 families affected in the run up to the end of the year. While Amazon has apparently indicated that it will offer affected employees jobs in other company locations, many on LinkedIn have already put up a green banner and are actively seeking new positions. Meanwhile, over on the Monster recruitment platform, Amazon warehouse staff are still being actively recruited at a wage of €14/hour. The e-Tailer will continue to operate its (much longer-standing) distribution center at the airport and go on feeding into its larger European logistics network.
Strikes and stress
That said, Amazon’s Leipzig operations are often plagued by strikes due to the ongoing poor pay and stressful working conditions. While air cargo operations officially took off in NOV20, distribution warehouse staff were again preparing to strike as they had done almost since its Amazon’s Leipzig beginnings in 2006/7. In 2014, the fight was to at least gain minimum hourly wage of between €11-12, whilst Amazon was paying €1 less than its peers at the time. Now, almost a decade later, the pay is still only being advertised as €14/hour. The most recent pay-related strikes took place this summer. No doubt, more are around the corner in the Christmas period. Amazon also faced much negative press a year ago, when it became known that a warehouse worker had died of natural causes while on shift, and operations in the Leipzig warehouse had continued as normal, with the body simply being shielded from view by stacked cartons, in the interim.
Why close the AAFC?
The reasons for closure of the Amazon Air Freight Center are given as being the result of a revision of its logistics network and concentrating more on southern Europe. However, already earlier this year, Amazon was scaling down its flight services to Europe and around 30 European pilots, based mainly in Germany, were let go in the summer. Also, various freighter leasing contracts have been coming to an end these past few months. Whilst 2021 through to early 2022 saw the greatest increase in Amazon’s operations, consumer behavior has slowed since then. At the recent ACHL in Athens, the consensus was that ecommerce is here to stay and is still growing, but the explosive boom of the pandemic years has slowed down to an annual CAGR of around 11%.
Meanwhile, over in America
Amazon’s stocks took a brief nose-dive this week, when the Federal Trade Commission and 17 state attorneys sued the e-Tailer, accusing it of abusing its position of power and actively suppressing competition on price, product selection, and quality.
FTC Chair, Lina M. Khan, stated: “Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies. […] Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them. Today’s [26SEP23] lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition.”
John Newman, Deputy Director of the FTC’s Bureau of Competition, added: “We’re bringing this case because Amazon’s illegal conduct has stifled competition across a huge swath of the online economy. Amazon is a monopolist that uses its power to hike prices on American shoppers and charge sky-high fees on hundreds of thousands of online sellers. Seldom in the history of U.S. antitrust law, has one case had the potential to do so much good for so many people.”
It will be interesting to see, this time next year, what potentials arose from the current developments.
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