The Need for Speed

I am a movie fan, and when I heard that the next Top Gun is coming out, I was reminded of the scene with one of the film’s most famous quotes, “I feel the need for speed, the need for speed.” Now, this sentiment is completely relevant to today’s e-commerce customers. E-commerce companies are in a constant balancing act. The e-commerce market is huge, growing fast, and is expected to be a $6 trillion market by 2025. Retailers want to ensure they are paying the lowest cost to get a package from point A to point B, while their customers want ASAP service, As-soon-as-Possible. Current consumer expectations for delivery are next day or at the absolute minimum, two days for delivery, even with known constraints of ground transportation in many countries.

Given the growth and adoption of e-commerce and the speed of change due to Covid across the globe, the expectations of e-commerce customers are to get their packages fast. It is becoming the norm across the globe, with expectations growing fast in countries like Mexico, Canada, and Brazil. Moreover, e-commerce is growing far faster in other countries, compared to the US. According to eMarketer, India, Brazil, Russia, Argentina, and Mexico all grew over 20% in retail e-commerce sales in 2021. And these countries will continue their double-digit sales growth.

However, many of these countries are vast lands and, unlike the US and Western Europe, do not have well-established ground transportation networks. In addition, many countries have terrain that makes ground delivery difficult in certain geographical areas. This creates limitations for the e-commerce company, and more importantly, extends these limitations to your customer. As a result, many companies choose air transport – considered a pricey option for many retailers. And recent studies have shown that many customers are not willing to pay extra for a faster delivery option. So, are you left with giving your business to the ‘Amazons’ of the world with their own logistics and global contracts with carriers like DHL, FedEx, etc.?

This is where new partners in e-commerce shipping and delivery such as Azul, Wideroe, Indigo, Volaris, and Air Canada can help. These well-known passenger air carriers can deliver at great distances. because they are heading there every day with scheduled service. And SmartKargo powers its e-commerce solutions with advanced technology that streamlines the shipment journey from the online transaction to the end customer. As an example, Indigo already has flights to and from Mumbai Guwahati and they can easily deliver e-commerce packages to and from the area. Since Guwahati is a difficult terrain to navigate, air transport provides a natural advantage. All of the partners mentioned have the air advantage and can provide next-day air delivery, at near-ground rates. These partners are experts in air travel and have the security and the innovative technology to ensure your package gets there at the right time and at the right price, all to the delight of your customer.

Air Cargo Strong growth in 2022

Air Cargo was the hero in many ways in 2021. It was able to deliver Covid vaccines globally and provide food for those countries in need, while also ensuring that e-commerce shipments made it to their destination – even while other modes were mired in bottlenecks. The airline industry was adaptable and continued to evolve in 2021 to meet the needs of commerce during a world health crisis. 2022 should be even better for the Air Cargo industry.

Overall, worldwide air cargo traffic is expected to be approximately 69.3 million metric tons in 2022. This growth is fueled by the expectation of robust e-commerce and more planes in the air this year. Moreover, airlines will continue to utilize the passenger-to-freighter (PTF) model as a continuing trend to generate additional revenue, at least until the EASA and FAA deadline for the preighter usage ends in July.

The global supply chain bottleneck will continue into 2022. We still have issues with cargo ships and containers which weigh heavily on global commerce. This is a great opportunity for air cargo to promote and provide additional capacity at a premium price in the first half of 2022. The second half of 2022 will see an abatement in the bottleneck as manufacturing increases, inflation eases and people come back into the workforce.

The Omicron Covid mutation is front of mind with most industries. Unfortunately, it is highly contagious, and it will spike after the holidays. It has already impacted air travel; however, with milder symptoms. If we do not see any major mutations, it is expected to be a short-term issue allowing air travel to continue to move toward 2019 levels. This is something I know we all have our fingers crossed for in 2022.

The pandemic forced or accelerated changes to the Cargo industry that were already moving, but at a slow pace. The digital transformation of airlines has hastened as well as the adoption of consistent standards for the cargo industry. This is key as the air cargo industry continues to shift to a view focused on the rewards of e-commerce shipping and delivery – from a view centered on purely containerized and palletized freight.

The opportunity ahead for air cargo is tremendous. There will be rate and volume increases in standard cargo as well as e-commerce packages. 2022 will be a year where passenger airlines will continue to increase flights, as many of us want to get away to travel the world again. Those extra flights are opportunities for airlines looking to continue to grow their volumes and their cargo revenues every year.