13 Jan Emerging and new business models in Air Cargo as key enablers for Growth
The Air Cargo sector has come a long way. From carrying small shipments to large-size and extra heavy cargoes, the sector has attracted all international cargo operators. Despite the fact that it is the fastest mode of transportation, the sector accounts for less than one percent of total freight carried in terms of both volume and weight. Undoubtedly, Air Cargo is a specialised sector and its development requires deep focus. Some emerging business models in this arena include:
e-Commerce
Online sales are expected to touch 4 trillion USD by 2020 and the Air Cargo industry is well prepared to leverage upon e-Commerce and facilitate this growth. Air Cargo is a key enabler for e-commerce, opening more and more opportunities for new digital business models and the growth of e-commerce will benefit both major corporations and small and medium-sized enterprises. E-Commerce is a growth driver for the Air Cargo industry, and therefore there’s an increasing need for speed, visibility and easy returns, all of which will impact the logistics chain.
E-Commerce is triggering a complete shift in supply chain requirements as well as models. With more e-commerce parcels having a higher Average Order Value (AOV), consumers are demanding for greater transparency and speed that require digitalisation and automation throughout the supply chains. E-commerce cargo entails piece handling that also makes it necessary to re-think in custom and cargo security regimes due to piece-level screening. For the purpose of trade facilitation, single window clearance system is getting implemented to ease up operations.
Southeast Asia is set for a promising growth in the e-commerce space. Opportunities in countries like China and Brazil is expected to have more growth opportunities in the e-commerce segment. Bangladesh and Vietnam are also growing markets. Brazil will spend around $15 billion over the coming 20 years just only to upgrade all its Airports.
The Amazon Effect has had two definite impacts on the Air Cargo industry – increased package volumes and changing customer expectations. These larger volumes have produced skyrocket demands and costs in some trade lanes and spurred new service providers to enter the e-commerce and package distribution space. The Amazon Effect has also changed customer expectations on shipment visibility and delivery timelines, which has caused traditional logistics service providers to have to review their delivery operations, system capabilities and B2C operations, as the end consumer is now expecting the same shipping experience that Amazon offers.
Global Pharma
The global pharmaceutical market is a rapidly expanding sphere. Reportedly, the demand for pharma products has doubled in the last decade and global sales in the sector are expected to reach $1.3 trillion in a few years. This, in turn, has accelerated the growth of the pharma logistics sector. A market research report from Technavio anticipates that this market will grow to $20.44 billion by 2021.
The rapid development of the pharmaceutical industry has caused hard-hitting demand transportation for temperature-sensitive freight. With new pharma and biotech goods entering the market each day, this demand is going to increase significantly. Airlines and Cargo Handlers utilising the latest cool chain technologies have more chances to take over this segment.
Added to this, also know some of the disruptive IT innovations that are changing the way the industry works.