News #108 - Air cargo confident on e-commerce

E-commerce continues to be a key growth driver for air cargo, fueled by rising consumer demand and the rapid expansion of emerging markets, even as regulatory barriers increase.

During a panel discussion at the IATA World Cargo Symposium, Ludwig Hausmann, Senior Partner at McKinsey & Company, asked experts if e-commerce’s current air cargo market share of 20-30% would rise by 2030. The consensus among panelists was clear: growth in e-commerce air cargo is inevitable, despite mounting regulatory challenges.

Emerging Markets Offer New Opportunities

Richard Broekman, Chief Commercial Officer and Head of Sustainability at Atlas Air, highlighted the vast potential in emerging markets.

“E-commerce from China has been monumental, accounting for nearly 50% of China’s outbound cargo flows,” he noted. “While the US remains a critical market, e-commerce companies serve the entire globe, and there’s still significant growth potential worldwide.”

Broekman acknowledged that stricter import regulations for e-commerce were likely in the future as current loopholes are addressed. However, he expressed confidence that the industry would remain viable if tariffs were kept at “reasonable” levels.

Adapting to Regulatory Changes

Panelists also discussed the impact of tariffs on e-commerce. Broekman warned that extreme measures, such as proposed tariffs of up to 145%, could place significant strain on the sector. He advised airlines to maintain a diversified business portfolio to mitigate risks, adding that e-commerce companies adept at managing data would be better positioned to navigate changing regulatory landscapes.

Nadeem Sultan, Senior Vice President of Cargo Planning and Freighters at Emirates SkyCargo, suggested that moderate tariffs, in the range of 20-30%, would be manageable for e-commerce players.

“Given that the average value of e-commerce shipments to the US is under $20, such tariffs could be absorbed,” Sultan explained. He emphasized that e-commerce is now a lifestyle choice, with air cargo playing a crucial role in meeting consumer expectations for fast delivery.

Speed Remains Essential

Sultan underscored the importance of speed in e-commerce logistics:

“Consumers today demand quicker deliveries, and future generations will be even less patient. The average shelf life of a product is much shorter than it was a decade ago. If a product is trending, it needs to reach the market in days, not weeks. Otherwise, the hype fades. Speed will always be critical, and e-commerce is here to stay.”

Shifting Markets and Strategies

Kendy Choi, Director of Commercial and Partnership Regional Hub Services at Cainiao, observed that e-commerce platforms are already adapting to the evolving landscape by targeting new markets.

“Platforms are positioning themselves in different regions,” Choi said. “This process may take time but involves strategic moves such as acquiring local players, offering unique products, and delivering superior logistics services.”

Customer-Centric Innovation

Ali Faddis, representing Amazon Air Cargo’s Aviation Safety and Operations division, emphasized a commitment to innovation and customer needs in response to market shifts.

“Amazon is closely monitoring the situation and assessing its impact on our operations,” Faddis said. “Our focus remains on our customers—both traditional Amazon shoppers and external air cargo clients. We strive to innovate on their behalf, ensuring flexibility in our services and adapting our business strategies to serve them effectively.”

A Resilient Future for Air Cargo

While regulatory challenges and tariffs present obstacles, the panelists agreed that e-commerce’s demand for speed, adaptability, and innovation will ensure its sustained growth as a vital component of the air cargo sector.

Source: https://www.aircargonews.net/iata-wcs/air-cargo-confident-on-e-commerce/1079978.article

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