Chances and challenges for the airfreight industry

‘Order today, get it tomorrow’: Today’s consumers are more demanding than ever before. They expect highest-quality products at the best price. Delivered in the quickest time possible. This trend has been triggered by rapidly growing online platforms such as Amazon, which will in the years to come continue to radically transform the entire landscape of international trade – and, with it, the logistics industry.
In the US alone, e-commerce has grown by an average of 15 percent per annum over the past 15 years. The total volume already amounted to 342 billion US dollars back in 2015. With sales of 590 billion US dollars and global players such as Alibaba, China is the strongest market for online trade.

E-commerce giants are gearing up

And there’s no doubt that the logistics sector is being driven forward with a dazzling display of innovations by Amazon in the west and Alibaba in the east: With the launch of Prime Air and some very promising deals with the Air Transport Services Group (ATSG) and Atlas Air, Amazon is simultaneously improving both its market position and its logistical performance: ATSG and Atlas Air have twenty B767 cargo airplanes each on standby for the e-commerce giant.

Amazon is also dead-set on the idea of having drones carry out last-mile package deliveries. The company has now patented a technology for mobile drone stations that will serve as warehouses and service points for charging, repairing and replacing drone batteries.

Mobile drone stations as warehouses are one of Amazon’s visions for the future of e-commerce.
The Chinese e-commerce market leader Alibaba is also investing heavily in expanding its logistics structure – with a minority stake in YTO Express, one of China’s major logistics companies. YTO Express is one of 14 companies working closely with Alibaba’s logistics subsidiary Cainiao to enable the e-commerce giant to keep up with the global growth of the e-commerce trade and develop the right logistics solutions.

IATA recognizes the need for action

E-commerce and omnichannel trade also offer airlines enormous opportunities, but they require old structures to be abandoned and new answers to be found to meet the needs of all stakeholders along the value chain.

In a strategy paper published in July 2017, the International Air Transport Association (IATA) stresses the need for a paradigm shift in the airfreight sector in order to benefit from the changed market environment – for instance, with fast and punctual delivery across all national borders and end-to-end track & trace technologies.

KLM Cargo has already responded with an innovative sorting solution to handle the high increases in package volume due to the e-commerce boom. The system used at Schiphol Airport processes more than 2,000 shipments per hour, allowing faster handling of all postal, express and pharmaceutical transports.
According to IATA, Kenya Airways and Flydubai already process all their air waybills electronically, thereby expediting the handling process. Cathay Pacific (80.5%) and Delta Air Lines (74.7%) are also on the right track (as of April 2017).

China’s best-selling e-commerce provider, JD.com, has signed a strategic partnership with China Eastern Airlines to optimize the efficiency of its logistics services, both domestically and internationally. Both companies share resources at their stations and combine their respective airfreight logistics networks.

End customers are considered too: CHAMP Cargosystems enables consumers to follow up on their order status using simple voice commands via Amazon’s Alexa service. The system integrates CHAMP’s TRAXON Track & Trace service, to which many airlines are already connected, including Lufthansa Cargo, American Airlines Cargo and Cathay Pacific Cargo.

Text by Bernd Maresch
Photos: Rbarta24 (Wikimedia Commons), Amazon, Paul Ridderhof