Sky’s the Limit

We are at the end of Q1 in 2022, and I have been thinking about Air Cargo. I was at the Air Cargo Americas event a few weeks back. I had the opportunity to participate in the “trends to Watch” panel discussion with Amar More, Michael Zahra, Ed de Reyes, and Emir Pineda as the moderator. While at the show, I spoke to peers, customers, and prospects; as a result, I can say that the future of Air Cargo should be Meteoric.

First and foremost, being at this event in person was delightful. Nothing is like meeting face to face with my peers and learning about their challenges, ideas, and successes. Much of the conversation was about the global economy getting better and the next steps coming out of the pandemic. We all discussed the tragedy in Ukraine and the impacts on the supply chain worldwide because of this unfortunate event.

We heard one of our phenomenal partners, Amerijet, had their CEO speak about: the expansion of his fleet and that more will be coming. On my panel, the future of drones will provide air cargo with additional innovative air transportation. And one thing was consistent; all the players in the air cargo space are looking to advance in innovation and efficiency using technology. Air Senegal was there, and we discussed their approach and use of our platform – They are leading innovation in cargo.

One topic talked about the most in Miami was e-Commerce. There were discussions on the stage, at the dinner meetings, and even in the hotel lobby. It’s easy to see why the e-commerce market is huge, growing fast, and expected to be a $6 trillion market by 2025. This phenomenon leads to a vast opportunity for airlines that embrace e-commerce air cargo transport. Many of our peers wanted to understand the best way to take advantage of our platform to drive e-commerce from the cart to the door on our platforms like some of our customers: Azul, Wideroe, Rivo, and Volaris, do today. The air cargo market will drive at a 4% CAGR, which the industry will continue to experience for many years to come.

It was great to see my peers again, learn about the new opportunities in the industry, and meet with our great partners like Amerijet, Air Senegal, Copa, and so many others. However, there is no doubt anyone working in the air cargo industry is in a great market, immersed in innovation, and one that is taking off.

A four-letter word

I have been working in logistics for some time now, and I know the first topic of any sales call will always be “How much?” – Cost is paramount for e-commerce shipping. That’s why I joined SmartKargo. They help e-commerce shipping costs go low while ensuring speed is there for the customers.

Now there are so many issues that are going on that distress shipping costs. We are finally getting past the pandemic issues that forced so many of us to rely on e-commerce, but we are all watching for other mutations. We now have the tragedy of Ukraine affecting oil prices and subsequently disturbing gas prices. There is the “Great Resignation” which is causing employee costs to rise to attract drivers, warehouse workers, and logistic specialists.  Moreover, there is the issue of overall inflation which is a result of the Fed’s response to the pandemic and the other issues listed above.

What is the impact on costs for e-commerce delivery? Higher costs and climbing fast – FedEx and UPS had already announced 5%- 6% rate hikes for this year. Surcharges are on the rise, and they will put a big hit on e-commerce companies’ shipping. Surcharges could hit as high as 30% for shippers as economics, geopolitics, and pandemic issues move. The reality of these costs is that they will be passed onto their customers.  Nevertheless, many platforms, e-commerce companies, and retailers have announced increases in shipping costs from eBay to Etsy and of course Amazon.

Now, I know the Head of Logistics for e-commerce companies doesn’t care how the package gets to their customer – Just if it’s delivered for the right cost, safely, when the customer expects it! That is what is unique about SmartKargo, they have an interesting solution for the middle mile. They utilize the existing airline’s belly space to ship e-commerce shipments but what is unique is the airlines are already heading to the destination in the lane because the passengers are heading that way. For greater distances, it becomes very economically feasible even in a rising surcharge environment. So, finally, a positive impact on cost.

Costs are always first in my conversations, but there are innovative solutions that will help e-commerce shippers to have options to attack rising costs and ensure their customers are delighted. Cost does not need to be a four-letter word we avoid.

Delivery can be luxurious

The luxury market is exploding this year and is expected to reach the 2019 sales levels. According to Bain “over the next four years, with the personal luxury goods market reverting to annual growth rates between 6% and 8% until 2025.” Although coming off a loose base of 2020 due to the pandemic growth has returned. Additionally, the USA and China showed were the marketing with the largest growth rates for 2021. However, will we just go back to the 2019 levels, or has the luxury market changed.

The pandemic reduced luxury purchases – Luxury furnishings were the only part of the market that grew because of all the time we were spending at home. Many of the luxury brands were very reticent to sell online. It did not mesh with their brand image and the in-person concierge service that many of the brands tries to foster. Many of these companies are changing faster than expected according to Deloitte. But they are changing.

Expansion into the e-commerce channel was inevitable for the brands that were dragging their feet to move into the e-commerce channel because of the pandemic. But there is also the rise of the Gen Z segments and the addition of the Gen Alpha.  In the Deloitte report,  Gen Alpha (those born since 2010) will consist of over two billion consumers and have a key impact on luxury brands and their growth. Traditional large luxury brands have an advantage over the new and smaller brands to change and adapt new technologies even is many of them were late to digitalization.

Many of the luxury brands will look to adopt technologies that will enhance and be in line with the brand and its promise. Utilizing video for cosmetics or accessories like handbags and jewelry is already being adopted. Extending the brands into social and apps and partnerships with other brands will continue to expand. But the metaverse is even more appealing to many of the brands. They can extend their brand to the virtual world – Many brands have announced their exploration of the metaverse, but we will see where it develops.

A key to luxury brands’ success is the same as non-luxury brands. Keep your customers delighted and that includes getting the e-commerce packages into the hands of your customers as fast as you can for the right price. Given the margins that many of the luxury brands generate they can take advantage of unique delivery experiences to enhance the customer experience.