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The e-commerce express

Airlines are moving in on the express parcel delivery business but with e-commerce shipments typically low in value, carriers are looking at the best approach to grow, as Ian Putzger reports

Volga-Dnepr Airlines is usually associated with An-124 behemoths, and to a lesser extent with the B747 freighter fleet of AirBridgeCargo, but the company is currently looking to establish an offshoot in the European Union that will operate narrowbody cargo planes. “We are evaluating the set-up,” says Robert van de Weg, Vice President of Sales and Marketing. The plan is to operate a fleet of narrowbody freighters, such as B737s, to carry e-commerce and express traffic within Europe.


Kenya Airways is another carrier that has set its sights on the e-commerce market. The African carrier has embarked on a transformation to make it more attractive to the likes of Amazon and retailers like IKEA to carry online purchases. Management plans to add some 20 new routes over the next five years and acquire 10 B737 aircraft – including two freighters. The objective is to boost the revenue contribution from cargo from currently 10% of the airline’s total to 20%.


Over the past couple of years, e-commerce has given a massive boost to air cargo traffic. It has been arguably the biggest factor behind the turnaround in the market that turned a capacity glut into a scramble for lift. The outlook for the segment is bullish. According to consulting firm Apex Insight, the global parcel market reached almost $350 billion in 2017, up from just over $310 billion the year before.


Figures from McKinsey indicate that the B2C segment accounted for 20% of the international express business in 2015, and the consultancy has predicted strong growth for this sector going forward. Logistics consultants Armstrong & Associates project that e-commerce logistics will increase at a rate of 18.8% through 2020. This momentum brings challenges. SEKO Logistics has concentrated on multi-channel logistics for retail and e-commerce. The company is bracing for a challenging peak season this year.


“The fourth quarter is going to be insane,”says Brian Bourke, Vice President of Marketing. The shortage of truck drivers in North America

is forcing retailers to look increasingly to air freight, he adds. Horst Manner-Romberg, Principal of parcel logistics research and consulting firm M-R-U, notes that cross-border e-commerce flows have been growing faster than domestic e-commerce.


For SEKO, cross-border e-commerce has been the biggest growth area in the past two to three years. Belgium, which has 11.3 million inhabitants, receives about two million parcels in a month from China. Sweden, populated by 10 million people, receives 150,000 parcels a day from China, Manner-Romberg observes. “This is reflected in the expansion plans of the Chinese online merchants and their logistics partners,” he adds, pointing to SF Express’s interest in establishing a gateway at a location in Central Europe like Leipzig or Frankfurt-Hahn. >>


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