Dive Brief:
- Air cargo is set to benefit from expanding cross-border e-commerce trade thanks to recent off-the-charts growth rates, the The Loadstar reported Monday.
- Retailers and manufacturers offering fast shipping grew an average of 1.6 times faster than their competitors, a benefit offered by air cargo. E-commerce items reportedly make up about 20% of global air cargo volume.
- Recent alliances between carriers and e-tailers show consumers are willing to pay for various modes of delivery, including ocean freight, depending on the urgency of their purchase. However, cross-border sales still must deal with transparency issues, as e-tail prices may not reflect the full cost of transport.
Dive Insight:
A rising tide lifts all boats, and planes, in this case. The worldwide growth in e-commerce and subsequent shift in consumer expectations to emphasize delivery over pricing, in some cases, has clearly boosted the importance of air cargo, at least according to a recent report.
It's not just retail delivery, however. Supply chains in general must adapt to a new consumer paradigm, a shift reflected in decreased inventories along with tightened fulfillment timelines. What that means, too, is that in the case of production or logistics disruption, express logistics benefit regardless of the location. Statistics following the inventory disruptions from Hanjin Shipping's bankruptcies show a boost in volumes handled by air, as necessity called.
In other words, demand for air cargo transport is clearly rising, not just in the U.S. but worldwide. Russia, for example, saw a 30% annual increase while cities like Singapore and Dubai see a 6.3% and 3.4% increase, respectively.
Yet, while this is great news for logistics companies, an increase in demand must be matched with an equal increase in supply if it is to be sustainable. And, like any other supply chain, all links in the air cargo chain must equally adapt when the tide rises.
However, scaling logistics capacity is not as easy as scaling production. Needless to say, securing more airplanes may be a challenge. Or, as was recently highlighted by Amazon's express logistics provider, supplying airplanes with qualified pilots in the current market may be a bigger challenge.
The talent shortage, it seems, is not isolated to manufacturing but present across the supply chain. Talk of truck driver shortages prevail too, in addition to the frequently-reported manufacturing skills gap. Perhaps the shortages are a symptom of a larger problem in professional education, hiring and recruitment practices.
