Air cargo transportation is another term for air freight. It is the carriage or the transportation of goods through an air carrier. Transport services via air are the most valuable when it comes to moving express shipments around the globe, and it consists of air mail, air freight and air express.
Definition of electronic commerce
E-commerce (electronic commerce) is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet.
These business transactions occur either as business-to-business (B2B), business-to-consumer (B2C), consumer-to-consumer or consumer-to-business.
commerce growth is the process of increasing revenue, expanding your customer base, entering new markets, earning a bigger market share. There are two distinctive stages of growth:
You grow in sales, number of orders, popularity, but you still operate on a small scale, probably sell in limited markets, don’t have many employees, etc.
The business goes next-level, expanding into new markets, adding more products and staff. All operations become more professional with dedicated teams. The scale of operation grows, and so do the reach, score, budgets, revenues, etc.
Not all ecommerce businesses want to go from 1 to 2, although it is almost inevitable as operations need to grow in capacity to keep up with growing demand. It is possible to stay in stage 1 and have a viable business, especially with good customer retention, to make a profit.
Ecommerce brands choosing this path have their marketing and operations perfectly optimized to convert and retain as best as possible because that’s the only way to stay in business.
Companies going for stage 2, on the other hand, need huge capital to ramp up production and marketing. Ecommerce growth is always reliant on marketing investments.
The Impact of E-commerce on Air Freight: Trends and Challenges
E-commerce is a rapidly growing sector that has transformed the way we buy and sell goods and services. The massive increase in online shopping has created new opportunities and challenges for the air freight industry, which plays a vital role in delivering products across the world.
Air freight is the fastest and most reliable mode of transportation for e-commerce goods, especially for high-value, time-sensitive, or perishable items. According to IATA, e-commerce represented up to 15% of air cargo volumes in December 2019, and this number is continuously growing, especially during and after the COVID-19 pandemic.
However, shipping e-commerce goods by air also requires transparency, consistency, and efficiency throughout the supply chain, which poses some difficulties for the traditional air cargo models.
In this part, we will explore some of the major trends and challenges that e-commerce brings to the air freight industry, and how the industry can adapt and innovate to meet the changing demands of online retailers and consumers.
- Increasing demand for speed and convenience:
E-commerce customers expect fast and convenient delivery of their orders, often within the same day or within 72 hours for international shipping. This puts pressure on the air freight industry to speed up its operations and optimize its capacity utilization.
Air freight is also competing with other modes of transportation, such as rail or road, which may offer lower costs or shorter transit times for certain routes or regions.
- Growing importance of data and digitization:
E-commerce requires visibility and transparency throughout the transport process, from order placement to delivery confirmation.
This means that the air freight industry needs to invest in digital technologies and platforms that enable real-time tracking, communication, and collaboration among all stakeholders involved in the supply chain. Data also helps to improve operational efficiency, customer satisfaction, and decision-making.
- Rising environmental awareness and sustainability:
E-commerce customers are becoming more conscious of the environmental impact of their online purchases, and may prefer greener options or alternatives. The air freight industry faces the challenge of reducing its carbon footprint and emissions, while maintaining its speed and reliability.
This may require adopting more fuel-efficient aircraft, optimizing routes and loads, or using alternative fuels or sources of energy.
- Lack of digitization:
The air freight industry is lagging behind in terms of digital transformation, which hinders its ability to meet the expectations of e-commerce players. Many processes are still manual or paper-based, which creates inefficiencies, errors, and delays.
The industry also suffers from a lack of data-sharing and standardization among different parties, which affects its visibility and transparency. The industry needs to embrace digital solutions and platforms that can streamline its operations and enhance its customer service.
- High delivery costs:
Air freight is one of the most expensive modes of transportation for e-commerce goods, due to factors such as fuel costs, airport fees, security charges, or customs duties. The high costs may deter some online retailers or consumers from choosing air freight as their preferred option.
The industry needs to find ways to reduce its costs and offer more competitive prices, such as by improving its capacity utilization, negotiating better rates with airports or carriers, or offering value-added services.
- Capacity shortage:
The air freight industry faces a capacity shortage due to the increasing demand for e-commerce goods and the limited availability of aircraft or space. The COVID-19 pandemic has exacerbated this problem, as many passenger flights have been cancelled or reduced, leaving less cargo space for e-commerce goods.
The industry needs to find solutions to increase its capacity and meet the growing demand, such as by using dedicated cargo aircraft, chartering flights, or partnering with other modes of transportation.
E-commerce is a powerful force that is reshaping the air freight industry. The industry needs to adapt and innovate to meet the new challenges and opportunities that e-commerce brings.
By investing in digital technologies, reducing costs and emissions, and increasing capacity and speed, the air freight industry can enhance its competitiveness and customer satisfaction in the e-commerce era.
For more information on how to enhance your supply chain, air & sea freight, and logistics business, follow our page, and share with your network.