Taking E-Commerce to the Skies

E-Commerce requires a different way of thinking about air cargo. Yet, while a change in mindset is never the easiest thing to come by in our industry, there really is no better time than now for airlines and air cargo carriers to start playing a significant role in e-commerce transport.

On Tuesday, November 16, I was fortunate to moderate a panel at the Dubai Airshow on the state of e-commerce as it relates to the ever-evolving air cargo industry. I was joined on the stage by Teddy Zebitz, CEO of Saudia Cargo, and Abhishek Shah, Co-Founder, and CEO of RSA National. The insights provided by these two gentlemen were invaluable, and they offered the audience with essential perspectives for industry experts and leaders considering e-commerce air cargo for the first time.

One of the highlights of our discussion was the astounding rates at which e-commerce continues to grow. It is anticipated that between January 2019 and December 2021, there will be close to a 45.8% increase in e-commerce as a percentage of all global retail sales.

While some of this is a natural outcome of the global pandemic and some imposed shifts in consumer behavior, we are seeing compelling trends indicating that the migration to e-commerce is permanent and will be resilient far beyond the initial impacts of the pandemic.

In our conversation, we explored the many facets of e-commerce and air cargo, particularly how it can lead to significant revenue across the value chain. We discussed how collaboration and data must go hand-in-hand and how critical it is for airlines to examine their approach with that of air cargo. Moreover, we see how businesses may be approaching e-commerce via their own business, partnerships, or others.

With the need for millions of e-commerce packages to be transported every day, airlines are poised to reimagine air cargo with the right technology. The demand is at an all-time peak right now, and airlines have the upper hand when it comes to getting e-commerce packages from destination to destination quickly and efficiently.

We all agreed that with the right technology, data sharing, and collaboration, airlines would capitalize on this tremendous global opportunity.

Observations – The ALTA Airline Leaders Forum

Earlier this week, I attended the 2021 ALTA Airlines Leaders Forum in Bogotá, Columbia. Our company was pleased to be a Prime Sponsor of this premier Latin American airline event. Over the three-day event, I met with key leaders from over 50 Latin American airlines, ALTA, IATA, the financial services industry, and had the privilege to meet and listen to the President of Columbia, Mr. Iván Duque.

One of our successful clients, Azul Brazilian Airlines, was represented by their exemplary CEO, John Rogerdson. Mr. Rogerdson was on a panel that discussed the role of air cargo during the global pandemic. This panel, moderated by IATA’s Peter Cerda, VP Americas, consisted of Mr. Rogerdson, Andrés Bianchi, CEO LATAM Cargo; Gabriel Oliva, CEO Cargo & Courier, Avianca; and Andreea Pal, CEO Fraport. Mr. Rogerdson and his peers reflected upon the changes in infrastructure, public policies, connectivity, security, and logistics over the past 23 months since the earliest days of the pandemic. The insights of this panel were representative of our experience across the board with other clients of SmartKargo.

As discussed at the ALTA Airlines Leaders Forum, air cargo has played an integral role during the pandemic. Air cargo is critical for speedy shipments of necessary medical supplies like vaccines and personal protective equipment (PPE). Airlines have the singular ability to transport cargo across long distances same-day—something desperately needed for temperature-sensitive vaccines and other medicines.

Finding ROI through Air Cargo + E-Commerce

In essence, the changes and progress made in air cargo over the past nearly two years are leading indicators for exciting developments forecast across the industry for the next 3-5 years. There is substantial revenue potential for airlines in the air cargo space from not only vaccine and PPE distribution but also e-commerce as consumers turn more and more to online shopping.

From personal experience here at SmartKargo, we also know that the pandemic has been a massive boon for retailers across Latin America but also in the delivery of e-commerce products that needed to be delivered quickly to people who had to stay home more often. This overall shift in consumer behavior is reflected in a surge of e-commerce growth for Latin America. In some countries, the growth in online eCommerce has reached and surpassed ~70% last year!

Latin American E-Commerce Surge

According to Americas Market Intelligence, e-commerce growth throughout Latin America is expected to be in an impressive range between 21% growth and 42% growth by 2024. Brazil, home of our client Azul Brazilian Airlines, is expected to see a 30% growth in e-commerce by 2024 and Peru, a staggering 42% growth rate. The adoption rate of mobile devices across the region continues to propel e-commerce across the region. AMI predicts that 75% of all e-commerce purchases will be made via mobile device by 2024 in Latin America. Even better for airlines is that 14% of all e-commerce transactions made in Latin America will be cross-border. Our airline clients like Azul Brazilian Airlines have demonstrated that e-commerce is a promising path forward for the air cargo space, particularly in a high-growth market like Latin America.

It was a pleasure being a part of the 2021 ALTA Airlines Leaders Forum in Bogotá, Columbia. To all of my industry colleagues present at the conference, it was great to discuss the future of airlines in Latin America and, particularly, the exciting times ahead for air cargo and logistics with e-commerce.