E-commerce continues to support air cargo growth

E-commerce was a boom vertical in the air cargo industry during the pandemic and demand has been a steady source of growth for airfreight companies since.

Ahead of a more in-depth look at how the sector is evolving in our IATA WCS special issue, Air Cargo News spoke to FedEx and Kuehne and Nagel (K&N) to find out their expectations for e-commerce demand, how they have been investing, and their views on the biggest challenges for e-commerce. 

What are your predictions for e-commerce demand in the air cargo industry this year?

Sebastian Wouters, senior vice president, global head of e-commerce at Kuehne+Nagel (K+N) says: “We believe e-commerce in general as a sector will continue to grow in the next few years, not just in established markets but we expect also growth from upcoming e-commerce markets. 

“We believe that cross-border deliveries will continue to be a substantial part of the e-commerce landscape and with that the need for air freight capacity on key lanes.

“As we have seen in the tail-end of 2023, several key players are large-volume movers out of key production markets, and their growth plans will continue to have an impact on air cargo demand.  We may see additional lanes absorb some volumes to accommodate this growth.”

Richard Smith, president and chief executive, airline and international, FedEx, adds: “We are optimistic about where e-commerce demand in the air cargo industry is heading, especially with online retail sales expected to reach more than $8 trillion by 2026.”

What investments are you making in e-commerce solutions?

Wouters explains: “At Kuehne+Nagel, last year, we launched an end-to-end cross-border shipping service for our e-commerce customers. This integrated service offers reliable airfreight capacity between key markets, integrated e-commerce import services, and combined injection into local last-mile networks – offering our customers end-to-end visibility for each B2C order (parcel) and competitive transit times at affordable costs, all managed by Kuehne+Nagel.

“Our focus for 2024 is to further expand this cross-border solution network by enabling more origins and destinations, expand our product offering with more speed/cost alternatives, and make this solution available to a broader set of e-commerce customers who would benefit from this.”

Smith stresses: “This is a pivotal time to create end-to-end digital solutions and an unparalleled experience for businesses of all sizes around the world. To achieve this, we are working to combine the power of AI and machine learning with the capabilities of the physical FedEx network.

“For example, FedEx will launch the first data-driven commerce platform that connects the entire customer journey later this year. The new fdx platform will make it easier for companies to grow demand, increase conversion, optimize fulfilment, and streamline returns. FedEx is the only logistics company to connect the entire customer journey by offering end-to-end e-commerce solutions for businesses of all sizes — all in one platform. 

“These digital tools will make supply chains smarter for everyone. FedEx will continue to develop innovative solutions for our customers and advocate for trade policies that make trade easier for all.”

What are the biggest e-commerce challenges for air cargo?

Wouters highlights“Besides capacity and managing supply/demand imbalances on key lanes, we see that compliance, regulations, and import-related topics keep e-commerce shippers of all kinds busy. New e-commerce merchants will enter the market, import and export regulations continue to evolve, product classification and compliance topics will remain important, as will the regulations about screening parties. We believe that the air cargo industry will be increasingly asked to support or offer (new) solutions for these areas.”

Smith suggests: “Cutting through red tape and minimising inefficiencies in customs processes will help unlock the full potential of e-commerce. De minimis policies and digitization of customs documentation, for instance, bring tangible benefits to shippers by reducing costs, simplifying processes at the border, and making it easier for products to enter new markets.”

//Subscribe to Air Cargo News’ twice weekly news updates and other digital products for free//