Episode Transcript
[00:00:00] Speaker A: Hello and welcome to the Lodestar podcast. I'm your host, Charlotte Goldstone. In this episode, I am joined by the Global Director and General Manager of Amazon Air Cargo, Tom Bradley.
[00:00:11] Speaker B: There's definitely been a change in focus towards other lanes that have more stability or potentially more growth. Really, our focus is to create the most reliable air service in the world.
[00:00:22] Speaker A: Tom joined Amazon in 2011, and prior to leading Amazon Air Cargo, he led businesses across Amazon's logistics and pickup divisions and warehousing and delivery functions. Tom has also worked in the retail industry focused on home cell phones and mobile electronics. So he certainly has a wealth of knowledge on the industry and a lot of interesting stuff to talk about. This episode, we cover market uncertainty. We get some exclusive insight into Amazon Air Cargo's new international lanes, and we take a look into the European market ahead of Air Cargo Europe next week. So enough of me talking, let's get straight into the episode.
Tom Bradley, Global Director and General Manager of Amazon Air Cargo. Hello, and thank you so much for joining me on the Lodestar podcast today. How are you, Tom?
[00:01:14] Speaker B: Very well, thank you, Charlotte. Thanks for having me on again.
[00:01:17] Speaker A: We'll get straight into it. And the buzzword of the market at the moment seems to be uncertainty. You hear it all the time. But we've had a mass of global tariffs in the US implemented, then retracted or postponed for 90 days, along with rising geopolitical tensions seemingly everywhere. This has meant that the industry is very turbulent right now, no, no pun intended, for shippers and forwarders who don't know how to plan their supply chains in the long term.
So how is Amazon as a capacity provider, able to give reliability to its customers in such an unreliable environment?
[00:01:53] Speaker B: Yeah, well, I mean, there is a lot going on for sure, but, you know, I think the one constant in the air freight market segment is change. And, you know, our aim as a business is to be the most flexible air service provider around. So, you know, everything we do focuses on our ability to provide that flexibility and to be able to react to these types of events. And so there's a few things that we're doing. So, one, our network itself is a key strength for us in that it's super dense, interconnected with other transportation methods. So, you know, we need to move capacity around. We. We can do that and we can ship Amazon packages on a variety of different transportation modes. So we can put inventory on other air lanes, we can put inventory on ground and intermodal, and that gives us a lot of flexibility.
The other things we've been focusing on are, you know, really modernizing our fleet, so moving towards a 330s, which are younger, more reliable. And so the fleet itself is a very reliable fleet.
And then, as you would expect from Amazon, our focus is on technology. So we have our network control center that has a whole suite of proprietary technology to identify issues in networks, move things around, and that creates a huge amount of flexibility.
I think the other element that's unique to Amazon is that we have the ability to change Amazon demand where we, where we flow Amazon demand. So up to 24 hours in advance of a flight taking off, we can actually push that inventory to other transportation methods.
And so that all kind of combines like the technology, the dense network, and that flexibility of Amazon packages to create a very flexible network. We actually just completed one of our first customer satisfaction surveys and it came back really strong. We scored 4.75 out of 5 on customer satisfaction. And I think that's really the key elements that drive it, that flexibility and ability to recover when things go wrong.
[00:03:54] Speaker A: Well, like I mentioned, a lot of this uncertainty that the market is suffering from is because of the constant changes in U.S. trade policy.
And I was talking to Brandon Fried of the Air Forwarders association recently. He was really highlighting that this uncertainty often drives inflation, which is never a good thing for consumer sentiment. And we've kind of seen on and off demand from North America, but in general volumes, particularly from Asia, are on the downward trend. And you mentioned flexibility in your network there. So has Amazon been able to find opportunities in other markets?
[00:04:28] Speaker B: Yeah, there's definitely been a change in focus towards kind of other lanes that have more stability or potentially more growth at the moment. And Amazon is no different. So, you know, we focus pretty heavily for the last six months or so on latam markets, particularly Colombia. And you know, really it's been a focus for us to find areas of opportunity that have both Amazon demand, Amazon export demand, and 3P cargo. And we've done that in Colombia. So we've really focused on the kind of booming E commerce market segment in Colombia, the existing perishables market segment, and that's created new lanes and new opportunities for us. So, yeah, whenever these kind of market trends occur, there's always areas of opportunity. And like I kind of mentioned earlier, the flexibility that our network has means that we can move capacity around and we can change demand flows and we can really focus on the market segments that are growing rapidly.
[00:05:29] Speaker A: I understand that part of the demand that you talk about for Colombia is also in collaboration with Colombian flag carrier airline Avianca can you give us some of the details of that, please?
[00:05:40] Speaker B: Well, Avianca is an important customer for us.
They're a core anchor of that kind of initial route that I kind of gave an overview on where we have, you know, largely Amazon demand that's moving southwards and Avianca, that's our customer moving northwards. And you know, it's been a really strong customer relationship that we, we've built with Avianca.
[00:06:02] Speaker A: You had mentioned that this was opening up possibility for third party cargo as well as Amazon cargo. Could you give us an indication of kind of the rough ratio of how much of the volumes in Latam is Amazon Cargo and how much of it is third party?
[00:06:19] Speaker B: Yeah, I mean we don't share specifics of kind of Amazon volume that's going into a market segment. But you know, there, there is a really nice balance between those two kind of business use cases and there kind of needs to be right, like when you've got a set amount of capacity like an aircraft, the, the demand needs to be relatively balanced. So there is, there is potentially a perception from some of our customers who don't know about the service that we offer, which is, I'm sure you're great at shipping Amazon boxes, but can you ship my stuff? And so like in the reliability and flexibility point, particularly on the flexibility point, it's also about the fact that we can handle like a really wide variety of cargo. And so like both the, you know, network flexibility is important. Also the ability to take that wide variety of cargo is important.
You know, that's why it's been so strong with Avianca, because they do have that northbound demand.
[00:07:13] Speaker A: Are you able to elaborate a bit on that north versus south demand dynamic between Avianca and Amazon Air cargo?
[00:07:20] Speaker B: Avianca Cargo is one of our key customers on this Miami to Bogota, Bogota, Miami lane.
You know, we have Amazon export volume that predominantly flies south and Avianca Cargo have purchased northbound capacity from us. And you know, we made a very conscious decision with Avianca given their kind of regional expertise. And when you combine that with Amazon's capacity and technical capabilities, it creates a really strong lane.
[00:07:49] Speaker A: And has there been much demand on these lanes so far?
[00:07:53] Speaker B: Yeah, I mean we talked a little bit earlier about the kind of changing macroeconomic trade dynamics and you know, Latam is a booming market in general, but also maybe as a reaction to those macroeconomic trends.
So we see that E commerce is booming, we see that the perishables market that's been there for a long time is doing really well.
And so it's a key route for us, like where we can combine Amazon synergies for Amazon customers with Amazon Air Cargo customers in the form of Avianca. In this case, we see a lot of demand. So we've been really pleased with the market segment reaction to us entering Colombia. And all signs point towards continued growth.
[00:08:39] Speaker A: You mentioned perishables there. With the perishable market, obviously it's even more important that this kind of cargo is moving quickly and carefully. So what is Amazon doing to make sure that these shipments are moved on time and intact?
[00:08:54] Speaker B: Yeah, we talked about it a little bit earlier, but, you know, the reliability of our network is, you know, first and foremost to us. We've created the network to serve Amazon customers. And I think most people will know that Amazon is obsessed by customers and will often make decisions that may not make commercial sense, but in the short term, at least. But providing a strong customer experience means that Amazon continues to grow long term. And we take the same approach with Amazon Air Cargo. So, you know, we've built resiliency into our network flexibility. We've got a wide variety of technology that allows us to react very quickly when, you know, the unexpected happens. A good example of this, we recently operated Mother's Day peak for flowers coming out of Columbia, and we actually had an AOG event that put the aircraft on the ground. But we knew about it so quickly and we had our contingency plans in place that we managed to get the aircraft back up and running within 16 hours. And we caught up with those shipments really quickly. And so the technology, the fleet itself, the fact that we actually hold quite a high ratio of spares, all to provide strong customer experience, means that our service levels are very strong.
[00:10:08] Speaker A: You spoke a bit about technology there. Can you go into any specifics about what kind of tech can be used to create this reliability?
[00:10:15] Speaker B: Yeah, well, we have flexible routing technology. That means that when weather events or mechanical events occur, we're able to use technology to make recommendations for where, how, when we should redeploy the rest of the fleet. So that's one example. The other examples is actually the, you know, Amazon demand itself only charges to an aircraft between 24 hours and 72 hours before the flight takes off. And so that means that we can play with Amazon demand and maybe ship some via different air origin and destination pairs, or maybe ship some via ground or intermodal. And that gives us the capacity and the flexibility to reroute whenever we need it.
[00:10:55] Speaker A: I think you spoke about this last time you came on the Lodestar podcast. But Amazon Air Cargo offers both scheduled services and ad hoc charters. But with the market currently being as volatile as it is right now, have you seen any particular appetite for one or the other? Like, what's the, what's the balance like there at the moment?
[00:11:13] Speaker B: Well, I mean, both chartered and scheduled service is a core part of our strategy and we see robust demand and robust growth for kind of both services. So, you know, in the, in the us, in India, in the eu, we have scheduled service that operates kind of intra region with a wide variety of kind of origin and destination pairs. We have 250 daily flights, 100 aircraft, and customers have access to all of that from a scheduled service standpoint. And so we see that that product, if you like, is desired.
The same speed and reliability that we've created for Amazon customers can be accessed by third parties.
That's, that's a key focus for us. But in addition to that, the charter opportunities open up a large portion of the market segment for US International air freight. And so again is a strategic focus. So, you know, we've seen a lot of growth in charter activities. Our EU business has a high degree of charter activity as well. So both are focuses for us and we see both as a core part of how we're going to grow moving forward.
[00:12:19] Speaker A: You mentioned the European market there, and that is something that I also wanted to ask you about. Obviously we focused a lot on north and South America, but what are you seeing in terms of the EU market right now and what is Amazon currently offering there?
[00:12:31] Speaker B: Yes, the EU market segment again is an important one for us. It's, it's growing fast and again, we offer a wide variety of services there.
The majority of that, that business unit is driven by charter volume, particularly to European islands like Malta, Cyprus, Guernsey, those types of locations. And growing the EU air cargo business is strategically important for us.
So all the same kind of drivers that we've talked about before are true of the eu. We have extreme flexibility there. We have mainly a fleet of 737s and they're very strong at moving fast and, you know, helping customers with opportunities. So definitely a focus area for us.
[00:13:11] Speaker A: I also see that Amazon Air Cargo is going to be attending Air Cargo Europe Hall A2 Booth 161 for those that want to stop by. Tom, since Amazon opened its doors to bookings from third parties, I assume there's going to be lots of existing and new customers.
So what's changed for Amazon since it took on this new customer base and launched itself into that kind of event scene.
[00:13:34] Speaker B: Yeah, well, I mean, it's kind of amazing to think that Amazon Air Cargo was only launched in September of last year and so we haven't even completed a full, full year of trade shows. And I think this is our fifth major trade show that we're attending, so.
[00:13:48] Speaker A: Oh, wow.
[00:13:49] Speaker B: You know, a lot of this is we're seeing customers for the first time, we're meeting face to face for the first time and you know, we're in a very high growth phase at the moment and so getting to trade shows and meeting customers is incredibly important for us. So this is our first major show in the eu, so we're excited to be there. Like, if people want to stop by, we'd be more than happy to kind of talk them through the details of our service and how we can help them.
[00:14:13] Speaker A: Yeah, honestly, the floor plans for those halls looks very chaotic. I think people are going to need a good map to be able to find all the different booths. But yeah, I will definitely come and see. Say hello as well.
Finally, Tom, I want to ask you kind of about predictions and plans for the rest of the year. First of all, does Amazon have its eye on any other key markets? Anything that you can tell me?
[00:14:37] Speaker B: We've got our eye on lots of key markets, most of which I can't speak about right now, but the ones that we've talked about, Latam, the focus on EU island connectivity, the focus on building out our scheduled service and giving customers access to, you know, the network that exists for Amazon customers, are really the key focuses right now.
[00:15:02] Speaker A: Looking now at the second half of the year, there's a lot of uncertainty, to say the least. Going back to what we mentioned at the beginning, I know you don't have a crystal ball and I know it would be very mean to ask you to make predictions in this environment, but are there any sort of trends that you foresee that you're preparing for?
[00:15:17] Speaker B: I think there's some trends that are set to continue for sure. I think E Commerce worldwide has been a trend that's been increasing for multiple decades now and I don't see that changing. I think E Commerce cross borders will continue to be a large theme of the market segment. And then for us, really our focus is to create the fastest, most reliable air service in the world. We're going to build that flexibility in that we talked about earlier. And so when things change, we can move fast and provide a really strong experience for our customers.
[00:15:52] Speaker A: And at the end of this 90 day deadline that the US President Donald Trump has promised. I mean I think there's a few different 90 day deadlines going on at the same time which is very confusing. So if it gets to the end of both of these 90 days and the tariffs are implemented in full as they were going to be at the beginning. Tom, what impact do you foresee this having on the market?
[00:16:11] Speaker B: I think we saw a pretty significant impact when the kind of tariffs were in for that period that they were in for.
You know I don't really see a reason why the air freight market segment wouldn't react in a similar way. We know that that's going to be a painful period for many of our customers and our intention is to provide that flexibility and reliability so we can help customers through that period.
[00:16:36] Speaker A: Wonderful. Well Tom, thank you so much for joining me on the Lodestar podcast today. It's been a pleasure to talk to you.
[00:16:42] Speaker B: Thank you. Thanks for having me.
