How e-Commerce Growth is Affecting Air Cargo
Updated: Mar 18, 2020
“It is estimated that by 2040 around 95 percent of all purchases will be made via eCommerce.” [Nasdaq]
Technology evolves at an expeditious rate, turning over every 19 months in comparison to education’s progression of 50 years. This digitalization insurgency has single handedly transformed the retail industry and will continue to do so on a year over year basis.
Consumer expectations, buying patterns, buying rates, and frequencies have all increased rapidly – with no signs of slowing. E-commerce has taken over the global online shopping economy, influencing all marketing and selling aspects including: business to consumer, consumer to consumer, and even business to business thus increasing the frequency of air cargo flights needed for shipment delivery.
The traditional world of retail is even turning to technology to enhance their shopping experience. Consumers in stores are prompted more often to use their digital devices. They can now physically stand in the shop while virtually trying on clothes, customizing products, scanning coupons, buying goods that are out of stock or sold online only, and even scanning labels to check current availability.
The e-Commerce Expansion
This rapid growth in e-commerce is an opportunity worth noting. The e-commerce sales forecast prior to the 2020 global pandemic was predicted to gross $4,000,000,000,000 USD. That is 4 trillion, with a “T”.
Over the last nearly two decades, retail sales on the world wide web have exceeded 20% in growth each year – exponentially faster than traditional brick and mortar stores, and exponentially higher than comparable business models industry wide. While these numbers are impressive, they only account for roughly 8.7% of total retail sales on a global level – putting into perspective just how great the future growth of e-commerce could be.
Online shopping increases parcel delivery services demand on an international scale with absolute certainty, thus directly correlating e-commerce with the air cargo industry. Over the last 10 years, air freight parcel volume has doubled – increasing much faster than overall economic growth.
The online marketplace has birthed a transparency that was never offered before with traditional retail stores. Now consumers are privy to inventory status, delivery dates, various shipping options, tracking functions, and even returns. Logistics providers now need consistent, reliable, low-cost solutions. This causes air freight specialists to adjust and develop services that cater to their e-commerce customers.
Considerations include: end-to-end tracking with instant notification, high priority shipments, and overall low costs. These amenities will quickly become mandates across the entire supply chain instead of the “nice to have” features of the past. Complete shipment oversight, comprehensive supply chain collaboration, complete logistics outsourcing capabilities, and granular metrics for predictive strategies will be the mitigating factors offering differentiation and ultimately business growth through continued development.
How will your company respond to the digitized commerce and required supply chains of the future?
What Does this Mean for Supply Chains?
Retailers and manufactures supply chain and logistical management needs have unavoidably been affected due to the substantial development and continued growth of e-commerce and online expansion. Directly corresponding to this development is the need to reach customers quickly, visibly, and efficiently. As of late, Amazon has begun same day delivery implementation by accessing and integrating warehouses across the nation for close proximity fulfillment services. An investment likely to bring a swift return as “around 59 percent of millennials say they are headed to Amazon before any other eCommerce website.” [Source]
How will the air cargo industry respond?
The industry wide action plan, according to IATA, is as follows:
· Increase security for all types of air cargo / air freight / and airmail
· Introduce best practices / speed transaction time / simplify the method / continually update systems
· Implement new technologies for better transparency and efficiency / grant customer access
· Partner with e-commerce leaders to teach air freight safety procedures
· Establish new business models / creative and adaptive initiatives for comprehensive integration
· Promote all-encompassing industry harmonization
Shipping and forwarding items can get expensive. Add to that a complicated supply chain with logistics and reverse logistics management and you have an actual nightmare for most logistics providers. E-commerce can be a logistical challenge for those who are not adept in the new patterns and emerging trends regarding all technological advances. Providers need to understand products and service level agreements, forecast volumes, and comprehend e-commerce network reach.
It is safe to say that technology has the ability to both streamline a supply chain but equally has the adverse possibility of complicating the current optimization, or lack thereof. Heightened customer expectations and the continued need to increase profit margins are predicators warranting newly implemented functionalities and partnerships. But what does this look like?
By partnering with an International Transportation Management team with industry expertise, your collaborative and co-managing efforts through strategic adaptability will compound efficiency while simultaneously increasing predictive profitability.
CLN Worldwide aims to stay ahead of the curve and capitalize on this e-commerce boom by fully optimizing the journey (end to end) and offering real-time interaction and visibility through our comprehensive platform. For more information on how to gain customized access to our CLN Tracking Dashboard, email us HERE to set up a formal walk through and trial period.
As a cross-functional team of logistics experts, we continue to help clients navigate areas of transportation, distribution, customs, regulatory guidelines, and compliance issues. Our focus in not on an individual product group, mode, or service offering but rather a comprehensive approach to effectively managing and optimizing the supply chain through diversified channels. Logistics can be a labyrinth. One question leads to three others. Our Solutions Team will help you through the maze.
Our Single Source Global Management System provides the visibility and structure to not only support, but to drive industry leading performance and comprehensive shipment management from each of our service areas.
For more information on how to efficiently improve and optimize your online supply chain, email us today to schedule a free over the phone consultation. We look forward to partnering with you to provide solutions to all of your current logistics issues.
Managing complex global supply chains for today’s middle market and emerging growth companies.