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E-commerce air freight boom set to continue

Friday, January 19, 2018 > 09:17:04
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Lloyd's Loading List





Cross-border e-commerce is driving a renaissance in air freight and will be the dominant factor again in 2018 in another very strong year for growth, according to a leading forwarder in the segment.

“The last quarter of last year was a watershed moment,” SEKO Logistics’ VP for marketing, Brian Bourke, told Lloyd’s Loading List in an interview.

Over the period, e-fulfilment shipments had boosted volumes on major routes for air freight such as US-Europe, Europe-China, and less-known trades including Hong Kong-Australia and US-Australia in both directions and between Hong Kong and Africa. Routes to the Middle East, Dubai in particular, were emerging too, he said.

“Cross-border e-commerce can thrive wherever there is the internet and discerning consumers ready to purchase goods online which can’t be found in their home market or can be sourced more cheaply elsewhere, even when transport costs are included,” he noted. “So there is tremendous potential for air freight to benefit.”

Bourke said there was also relatively little seasonality for this sector, although it had an obvious peak in December. And he revealed that SEKO Logistics was planning to move into bigger facilities at its air hubs at Amsterdam Schiphol, London Heathrow and New York JFK airports, largely in response to strong growth in e-commerce shipments.

SEKO was earlier than many of its freight forwarding and logistics competitors to see the potential of the e-commerce sector – for example, acquiring an equity stake in a full-service e-commerce agency in 2014 to provide a complete solution for retailers, and starting up activities in Asia four to five years ago. In some of these Asian markets, e-commerce now represents more than 50% of SEKO Logistics’ total air freight volumes.

In late 2016, it was selected by Alibaba as one of just a handful of international logistics companies to be a launch partners for its ‘OneTouch’ platform, to offer services to any Alibaba customer or company registered in Hong Kong or Taiwan shipping products to China or to any of the world’s major e-commerce markets.

Other e-commerce-related investments have included expanding its warehousing and fulfilment capacity in Hong Kong as it continues to build an ‘e-commerce gateway’ for retail and high-tech customers targeting China’s rapidly growing online consumer market.

And late last year, SEKO Logistics launched a new Airfreight+ Final Mile service in North America that aims to give retailers, marketplace merchants and consumer brands “a home delivery solution for bigger, bulkier products that delivers air cargo to their door at the speed of e-commerce”. Aiming to fill a growing gap between parcel and heavyweight deliveries, SEKO said the service was already being used “by a major electronics retailer in the southeast”, the product is designed to provide a fast and secure delivery to the customers’ door by combining domestic air freight with SEKO’s final-mile delivery service.

Underlining the role of cross-border-commerce in the sustained upturn in air freight over the last year or so, Bourke noted: “Since the financial crisis (of 2008-2009) airlines have been struggling generally and while things have been going better for them from a passenger traffic perspective, it’s always seemed to be a kind of anaemic, lacklustre growth on the cargo side. E-commerce has changed all that and created a buzz and it’s genuinely exciting to experience this renaissance in air freight and the evolution in retail in general.”

He continued: “There have been a few upticks, like the market correction in 2010 or when a new high-tech device, such as the iPhone, was released, but nothing that’s lasted. Now is the first time in a long time in air freight that we’ve seen a significant, consistent and on-going surge in demand.”

Commenting on current market conditions, Bourke revealed that the New Year had not heralded too much of a decline in demand. “Of course, there’s some slack post-holiday season and we suspect there will be a lull at Chinese New Year (which begins on 16 February), but that’s it.

“The market will then go back to full force, with volumes increasing as the year progresses with a long tailing crescendo to the end of 2018. This is the ‘new normal’ with an end-of-year peak season stretching from October all the way up to Christmas Day,” he predicted.


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