08 Feb Air cargo dovetailing e-commerce growth?
Recently, there has been a growing trend of air cargo service providers developing or looking to develop e-commerce capabilities. And IT solutions providers have a major role in supporting these services.
IATA research initially forecasted that the annual value of global e-commerce sales would exceed US$4.4 trillion by 2025, but it actually reached this milestone in 2021.
The new estimated forecast for 2025 has now grown well beyond past predictions to reach US$7.4 trillion. Here are some facts about why air cargo service providers are keen on e-commerce and how the same will transpire in the future.
Longevity and diversity
Many airlines and allied air cargo actors will continue to adapt to the e-commerce model to ensure longevity and diversify their revenue streams.
Airlines that have adopted the technology and processes to automate the e-commerce shipping and delivery process now realizing exceptional revenue growth via their previously underutilized domestic flight networks.
e-Commerce companies are always concerned about Amazon as it continues to increase capacity—and are looking for fast, efficient alternatives to ship their packages to customers.
Airlines can meet this need, expand their revenues and provide a competitive offering for e-commerce shipping that allows the retailer to compete with Amazon effectively.
Other Air Cargo actors are also capitalising on this wave by responding by implementing measures such as specialized cargo terminals, which are equipped with advanced sorting and handling facilities to process smaller, time-sensitive packages more efficiently.
Facilitating air cargo service providers to become virtual integrators
Maersk and CMA CGM have pursued a fast-paced strategy that has transformed them from being largely box carriers into end-to-end logistics players; some would say integrators.
Today, they are also forces to be reckoned with in air freight – having set up their own airlines, acquired freighters and purchased forwarders. There is a movement to handle end-to-end logistics.
The new age cargo community Systems addresses the entire supply chain; it can automate the shipment journey, beginning with the online transaction at the retail shopping site. The cloud-based platform provides real-time data visibility and seamless transparency between all parties via mobile applications.
EDI-messaging facilitates transactional communications that govern shipping and delivery details for each step from the online shopping cart to the customer’s door.
API integrations allow airlines of any size to “wrap” the solution around their existing air cargo management systems to extend the profitable new business line with little upfront investment.
Bottlenecks to achieve the goal
e-Commerce is still a new game for air cargo, considering that it has gained momentum in the last 3 years. The industry needs to have the required safety and security for barrier control and reduce potential risks.
This calls for standards and guidelines for safety and security. Unlike other industries, the logistics industry has varying degrees of IT maturity amongst its stakeholders. Large players have sophisticated IT solutions to manage their end-to-end operations, but the SMEs would still be on excel based data or, worse, maintain physical files.
Though they are disparate in operations, what links them is the common data and the same cargo they handle at various times during the shipment journey. With different contours of IT systems, the movement of cargo across the supply chain suffers.
Data discrepancy, time-consuming operations, and a lack of trade visibility and transparency exist. Thereby making the entire supply chain inefficient and non-conforming.
The role of freight forwarders
The role of the freight forwarder is incredibly important and will continue to be so. The notion of consolidation is critical when it comes to things like e-commerce.
Moving tens of millions of shipments of small individual items a day will be hugely complex and costly. So there needs to be much more focus on consolidated e-commerce and breaking down e-commerce at the destination.
Here is where a unique solution like a logistics e-Marketplace would be the game-changer. Logistics e-Marketplace has been a technological awakening for many in the change-adverse logistics industry.
A true disruptor. Bringing logistics service providers together on a unified technology platform—a huge step for the e-commerce industry known to be highly fragmented and relational is disrupting the industry.
The platform connects shippers and end-user with a host of features like price discovery, reviews and ratings, airline schedules, route optimization, and predictive analysis.
Differentiating wholesale and retail offerings
Air freight services for shippers and end customers are part of an overall integrated supply chain. For shippers, it is the first mile, and for end consumers, it is the last mile of the same chain. But what is interesting is that with e-commerce, some of the traditional retail channels are being bypassed completely.
This has led to an increase in demand for air cargo handling capabilities that can meet these new customer demands. Shippers are always looking to deliver at the fastest time with the lowest cost. This calls for developing scalable capabilities, competing tracking facilities, and shipments to be moving more than being on the ground.
Cargo Community Systems are developed to address these supply chain issues effectively; the platforms like logistics e-Marketplace, airport cargo community system, port community system, and digital corridor get all stakeholders like shippers, freight forwarders, carriers, airports, regulatory bodies, transporter, warehouse operator, cargo handler on a common portal. These platforms have proved to save cost and time by around 30% and move cargo faster by 70%.
Future of e-commerce
e-Commerce will be bright and strong in the future. It will grow beyond national boundaries to find new markets. The combination of machine learning/artificial intelligence and big data can do more than just automate — it can automatically optimize a number of processes that currently either take tremendous amounts of time and effort or can’t be done at all.
One area it’s set to drive is increased e-commerce personalization that can help give customers a better store experience. With the rapid expansion of Direct to Consumer (D2C) brands and their customer-binding ethos, the e-commerce sector has counterbalanced the resumption of in-store shopping alongside an increased focus on omnichannel and social commerce.
e-Commerce will also see growth as hyper-local and cross-border. We will see an entire range of new products being added, like – groceries, agro-produce, medicines and even services.
It will capitalize on customers’ expectations for instant gratification and use innovative technologies like Blockchain to simplify logistics. Another important trend that would shape this sector will be data and privacy laws.