The future of Amazon’s $117 billion logistic service revenue is under threat as pilots from Air Transport International (ATI), a crucial air freight provider for Amazon, have voted to authorize a potential strike.
The pilots are expressing concerns over low pay and a notable increase in turnover. If the strike materializes in the coming year, Amazon’s extensive delivery network may encounter disruptions, Wired reported.
Over the years, Amazon has established a robust third-party logistics (3PL) operation, powering its e-commerce network and extending support to businesses beyond Amazon.com.
The company delivers 3PL services through Fulfillment by Amazon and Amazon Multi-Channel Fulfillment, catering to e-commerce fulfilment for orders placed on Amazon.com and order fulfilment for sales channels outside of the platform, respectively.
In Amazon’s 2022 annual report, the company disclosed a substantial $117.7 billion in net sales from its third-party seller services, constituting nearly 23% of the total revenue.
During the past three and a half years of negotiations between the pilots’ union and ATI, industry wages have risen, leaving ATI’s pilots dissatisfied with what they perceive as falling behind in compensation. ATI, owned by Air Transport Services Group (ATSG), is responsible for operating half of the 80 US aircraft currently in service for Amazon.
The potential strike, supported by 98% of ATI’s 640 pilots, is subject to federal law procedures. The US government’s National Mediation Board will intervene in airline labour disputes, initiating a 30-day cooling-off period if an impasse is declared, potentially leading to a walkout or lockout.
Amazon Air, relying on various cargo airlines for its air service, operates over 330 daily flights in the US alone, facilitating the transportation of packages from fulfilment centres to airports. ATI’s substantial dependence on Amazon is evident, with 94% of its flying hours dedicated to Amazon deliveries.
The pilots’ union asserts that ATI has experienced a record attrition rate, with over a third of pilots leaving this year. Rising concerns over diminished service quality and pay disparities among pilots have fueled discontent within ATI.
The last and only time Amazon faced a strike by one of its air carriers was in 2016, during the early days of its air cargo operation, when 250 pilots for ABX Air walked off the job. A judge deemed the strike illegal, however, and ordered the pilots back to work the following day.