Air trans­port needs right lo­gis­tics so­lu­tion to ride e-com­merce wave

Gulf Times Business - - AVIATION BUSINESS - Pratap John is Busi­ness Ed­i­tor and Chief Busi­ness Re­porter at Gulf Times. By Pratap John

The emer­gence of elec­tronic com­mu­ni­ca­tion chan­nels has led to a dra­matic drop in the num­ber of let­ters sent, but more and more parcels are now be­ing de­liv­ered ev­ery day, thanks to e-com­merce. More than 320bn let­ters and 7bn parcels are sent across the globe ev­ery year and air­mail plays a key role in their de­liv­ery.

Postal ser­vices around the world, there­fore, are con­sid­er­ing po­ten­tial fu­ture prod­uct and ser­vice en­hance­ments to sup­ple­ment or re­place de­clin­ing let­ter-post vol­umes, air­mail in par­tic­u­lar, ac­cord­ing to the Uni­ver­sal Postal Union (UPU). Some postal oper­a­tors are find­ing that ex­ist­ing in­fra­struc­ture, cus­tomer re­la­tion­ships, and sup­ply chain ex­per­tise can be op­ti­mised, for ex­am­ple, in of­fer­ing prod­ucts, ser­vices, so­lu­tions re­lated to let­ter post or par­cel post.

Some oth­ers are con­tem­plat­ing ar­eas that would be un­re­lated to the core busi­ness, but that might com­ple­ment or in­crease their of­fer­ings. Ob­vi­ously, in­creas­ing global trade is push­ing postal ser­vices to lis­ten closely to cus­tomers and work hand in hand with con­sumers and mer­chants to ride the e-com­merce wave. The story of air­mail ac­tu­ally be­gan on May 15, 1918, when the world’s first reg­u­larly sched­uled air­mail route was in­au­gu­rated un­der US gov­ern­ment aus­pices be­tween New York and Wash­ing­ton, DC with a stop at Philadel­phia.

The dis­tance of the route was 218 miles, and one round trip per day was made, six days a week.

Since then, postal providers around the world have counted on the air­line in­dus­try to pro­vide fast and re­li­able ser­vices for their mail prod­ucts. The emer­gence and pop­u­lar­ity of elec­tronic de­liv­ery chan­nels are now chal­leng­ing the postal sys­tem in gen­eral.

Glob­ally, air­mail vol­umes have been de­clin­ing as the world econ­omy in­creas­ingly turns to e-com­merce: whether for on­line shop­ping be­tween con­sumers and busi­nesses, from con­sumer to con­sumer, or busi­ness to busi­ness. By 2020, some 940mn on­line shop­pers are ex­pected to spend al­most $1tn on cross­bor­der e-com­merce trans­ac­tions. On­line busi­ness-to-con­sumer sales are ex­pected to hit $2tn by 2020, ac­cord­ing to an es­ti­mate.

Ini­tial UPU data track­ing global postal ex­changes in­di­cates promis­ing growth along cor­ri­dors in North and South Amer­ica, Europe and Asia for cross-bor­der e-com­merce.

But to main­tain the same pace of growth in the Arab world and in Africa, stake­hold­ers must work to hop on the eco­nomic band­wagon. Tra­di­tional and dig­i­tal worlds are also closely in­te­grated with omni-chan­nel so­lu­tions and busi­ness mod­els mix­ing off­line, on­line and even vir­tual ex­pe­ri­ences.

Since 2005, global in­ter­net re­tail sales have grown above 20% a year on av­er­age ac­cord­ing to Euromon­i­tor In­ter­na­tional, much faster than tra­di­tional store-based sales. In ad­di­tion to ris­ing do­mes­tic vol­umes sent by large and small e-re­tail­ers, the fast-grow­ing cross- bor­der e-com­merce mar­ket re­mains a key growth driver. In­ter­na­tional Post Cor­po­ra­tion (IPC) re­ported in its an­nual sur­vey that be­tween 2013 and 2015, e-com­merce from Asia Pa­cific to Europe grew by 66%. The global value of e-com­merce sales fore­cast for 2019 is ex­pected to reach $3.5tn.

De­spite these im­pres­sive fig­ures, on­line re­tail is still rel­a­tively im­ma­ture as it ac­counts for only 8.7% of to­tal re­tail sales, ac­cord­ing to ‘eMar­keter’. Those fig­ures show the huge po­ten­tial of e-com­merce in the near fu­ture. None­the­less, e-com­merce is a fu­ture growth driver for the air cargo in­dus­try, as on­line shop­ping boosts de­mand for par­cel de­liv­ery ser­vices world­wide.

On ag­gre­ga­tion, the in­dus­try’s par­cel vol­ume more than dou­bled over the last decade, grow­ing at a rate far above eco­nomic growth, points out the In­ter­na­tional Air Trans­port As­so­ci­a­tion (IATA).

On­line shop­pers are now buy­ing more and more of­ten and cross- bor­der e-com­merce vol­umes are grow­ing. In March 2017, the ma­jor­ity of the on­line shop­pers in China, the US, Ger­many and United King­dom buy on­line at least once ev­ery two weeks, IPC noted.

The global scale of the In­ter­net means that on­line retailing can reach more prospec­tive cus­tomers than the brick and mor­tar based com­peti­tors.

To de­liver to their cus­tomers, e-com­merce play­ers can choose a va­ri­ety of lo­gis­tics op­tions in­clud­ing sur­face trans­port (such as road, rail, and sea) and air trans­port.

But when it comes to de­liv­er­ing goods glob­ally with speed, greater ef­fi­ciency and re­li­a­bil­ity, air trans­port is clearly well-po­si­tioned to serve the mar­ket needs.

But to do that the air trans­port in­dus­try must be ready to of­fer the right lo­gis­tics so­lu­tions for the e-com­merce re­tail seg­ment, sup­port­ing their busi­ness growth.

More than 320bn let­ters and 7bn parcels are sent across the globe ev­ery year and air­mail plays a key role in their de­liv­ery

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