Putzger perspective: E-commerce shipments face rising pressure

These days no industry event would seem complete without at least one firm verdict from the podium that e-commerce is going to be the driver of air cargo growth.

If you’re not in e-commerce, you may as well pull down the shutters and retire.

On the regional scene, such predictions have proven to be somewhat bold. The integrators have been shedding planes at a blistering pace, while Amazon – the poster child of rampant air network growth – has been scaling down its use of freighters.

Suddenly speed to consumer no longer rested on leveraging its air network but shifted to Amazon warehouses that are mushrooming across the US.

This shift in strategy is playing out in a fierce price war between Amazon, Walmart and Target, where the latter are leveraging their retail outlet footprint to speed up deliveries at a fraction of the cost of airfreight.

Will the cost of flying $10 garments from China to North America and Europe catch up in a similar manner with Temu and Shein, who have been the driving force of rampant growth for air cargo?

It may do so in the long run, but these firms have deep enough pockets to continue to use airfreight while they are slowly building up ocean cargo and warehousing capabilities, just like Amazon has been able to subsidise its e-commerce logistics activities with the money garnered from its web services.

The argument that it is not sustainable has been made about free delivery and next-day delivery almost as long as e-commerce has been around.

Now there is a different wrecking ball hitting e-commerce flow, as US customs have clamped down on de minimis shipments.

This is just the opening salvo on this front. Lawmakers are becoming increasingly strident in their stance for a number of reasons, from concerns over drugs and contraband to anti-competitive ploys like splitting consignments and mis-declaring the value of goods.

There are several legal initiatives before the US Congress that seek to choke de minimis flows, not to mention regulatory moves to tackle this traffic from an angle of forced labour rules.

The US is not alone there. European lawmakers and governments elsewhere have become increasingly alarmed and are pondering or crafting legislative barriers to stem the tide of e-commerce.

The coming months will provide an interesting test if these developments can stem the tide of airborne e-commerce shipments.

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