Putzger Perspective: Parcel monster?

By Ian Putzger

Amazon Air B767-300F

Over the past 15 months, e-commerce has been the chief engine of growth for air cargo, as well as other sectors, from warehousing to fulfillment technology start-ups, but is the industry nurturing a monster with dire consequences for many forwarders and airports?

Two years ago there was a lot of skepticism about this business. The likes of Amazon did not have a reputation for paying top dollar for transport and how could an assortment of low-cost items produce half decent yields? Today it seems airlines can’t get enough of the parcel tsunami that is showing a voracious appetite for lift.

Just look at JD.com and Alibaba’s logistics arm Cainiao. The former mounted dedicated freighter flights between Nanjing and Los Angeles in early June, following the launch of flights to Thailand the previous month.

Cainiao has teamed up with Saudia for flights from Hong Kong to Liege via Riyadh, mounted flights to Budapest and partnered with Hong Kong Air Cargo for flights to three Southeast Asian capitals.

All of this is gobbling up lots of capacity. And then there are the integrators that keep adding international flights in response to surging e-commerce.

As long as international belly capacity remains hamstrung, the shortage of lift is forcing ever more forwarders to sign up for dedicated freighter flights. Mid-sized players feel compelled to join in the scramble. EgeTrans, a mid-sized forwarder from Germany, has used at least 50 ‘preighters’ operated by Lufthansa to move freight to Chicago.

Where does this leave smaller forwarders that do not command the volume to secure a charter or part-charter? It is ironic that the surge of e-commerce, much driven by small online merchants, is making it harder for small agents to find lift.

For good measure, the e-commerce avalanche hits them again beyond the airport perimeter. Like airfreight costs, warehousing rates have gone through the roof because of insufficient capacity, owing to surging e-commerce volumes.

The warehousing issue is also a challenge for airports, as much of their existing infrastructure is not adequate for e-commerce, which is labour-intensive and space-consuming.

The results of DHL hub Leipzig show that parcels are not a slam-dunk for airports. Between 2000 and 2020 it produced a deficit of more than €800m euros.

E-commerce will continue to grow and propel air cargo, but it requires careful planning to make it work.

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