Update: ATSG filed a request with the United States District Court, Southern District of Ohio to issue a temporary restraining order that would force the pilots to end their strike. The court deferred the decision until an evidentiary hearing scheduled for Wednesday afternoon.
Dive Brief:
- About 250 pilots flying for a subsidiary of airplane leasing company Air Transport Services Group Inc. went on strike Tuesday morning and will not fly scheduled routes for Amazon and global shipper DHL, according to a press release emailed to Retail Dive.
- The pilots are protesting staffing shortages in result of too many emergency runs, precluding time off in violation of their contracts. ATSG’s ABX Air operates 35 daily flights for Amazon and 45 daily flights for DHL.
- The Railway Labor Act, a federal law protecting commerce from disruptions involving labor disputes, doesn’t apply, according to the Airline Professionals Association, Teamsters Local 1224, which represents the pilots, because the issue concerns a violation of a contract, Bloomberg reported.
Dive Insight:
The strike comes on the heels of a holiday season in which delivery companies anticipate record e-commerce sales. United Parcel Service in October said it expects to deliver more than 700 million packages between Black Friday and New Year’s Eve, up 14% from the same period in 2015.
Even if it’s deemed improper or is short-lived, the strike unveils Amazon’s vulnerability to the kinds of issues normally reserved for shipping companies like UPS, FedEx or DHL. In March, Amazon bought a 9.9% stake in ATSG, based in Wilmington, OH, and the e-commerce giant’s fulfillment unit, Amazon Fulfillment, said then that it's leasing 20 Boeing 767s from ATSG to improve delivery operations.
In August, to great fanfare, Amazon revealed its first Prime Air-branded cargo aircraft in an inaugural flight during Seattle’s annual Seafair Air Show. The Boeing 767-300, dubbed Amazon One, is one of 11 planes flying for Amazon through air cargo partners Atlas Air and ATSG in conjunction with the e-retail giant’s ambitious logistics and fulfillment efforts. Amazon said then that the Prime Air transportation network will expand to 40 leased planes over the coming months.
The strike only adds to the fulfillment and delivery costs that are already weighing Amazon down. The e-commerce giant in October logged its sixth straight profitable quarter, but operating expenses of $32.1 billion (a 29% increase from $24.9 billion in Q3 last year) undid that almost totally. Amazon’s much-touted fulfillment and shipping ambitions look to have finally caught up with it: Those costs rose more than sales.
