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Air Cargo and E-commerce in India 2024: A Flourishing Landscape for Airlines

The synergy between air cargo services and e-commerce in India is poised to offer significant opportunities for airlines operating in the region throughout 2024. With a rapidly expanding digital consumer base and improvements in logistics infrastructure, India’s market dynamics are encouraging a closer examination of the potential growth in this sector. Let us look at the current trends in air cargo and e-commerce, projects the outlook for 2024, and highlights the opportunities for airlines in India.

India’s e-commerce market has been on an upward trajectory, driven by an increase in internet penetration, a burgeoning middle class, and a young demographic inclined towards digital shopping. The COVID-19 pandemic accelerated this growth, pushing more consumers to embrace online shopping for a wider range of goods, including essentials, which necessitated reliable and quick delivery solutions. Forbes predicts an annual growth rate of approximately 12% through 2029, reaching INR 7,591.94 billion in 2029. This surge is likely to be supported by increased consumer demand from tier 2 and tier 3 cities, where internet penetration is improving.

Air cargo has been integral in meeting these delivery expectations, especially for time-sensitive or high-value products. The air cargo industry in India has been revitalized post-pandemic, with an increased focus on enhancing air freight capacity and reducing turnaround times. Major airports in cities like Mumbai, Delhi, and Bengaluru have upgraded their cargo handling capabilities, which is a positive sign for the logistics sector.

The economic outlook for India in 2024 is promising, with the IMF projecting robust GDP growth. This economic resilience supports consumer spending and heightens the role of e-commerce as a critical retail channel. The government’s continued emphasis on digital infrastructure and supportive policies, such as the National Logistics Policy, are expected to further streamline logistics and reduce costs associated with air cargo.

Technology adoption within the Indian air cargo industry is set to escalate, with more companies leveraging AI, data analytics, and IoT to optimize cargo operations. These technologies can help in predicting demand, managing inventory, and enhancing the overall efficiency of air cargo operations.

Sustainability is also becoming a focal point, with Indian airlines increasingly investing in more fuel-efficient aircraft and exploring sustainable aviation fuels (SAF) as part of their commitment to reducing carbon footprints. These initiatives not only align with global environmental goals but also improve the public perception of airlines.

For airlines operating in India, 2024 presents several opportunities:

  • Expanding Cargo Capacity – There is a clear opportunity to expand cargo capacity, either by converting passenger planes to carry more cargo or by increasing the number of cargo-only flights.
  • Partnerships with E-commerce Giants – Forming strategic partnerships with leading e-commerce platforms can provide steady revenue streams and optimize cargo space utilization.
  • Investment in Technology – Investing in the latest cargo handling and tracking technologies can significantly enhance operational efficiency and customer satisfaction.
  • Tier 2 and Tier 3 City Focus – Expanding services to include more tier 2 and tier 3 cities can tap into the growing e-commerce market in these regions.
  • Sustainability Initiatives: Airlines can differentiate themselves and capture market share by leading in sustainability, which is increasingly important to both consumers and corporate customers.

The forecast for air cargo and e-commerce in India for 2024 is highly optimistic, with substantial growth opportunities for airlines. By capitalizing on technological advancements, expanding service offerings, and aligning with sustainability goals, airlines can not only enhance their operational efficiencies but also position themselves at the forefront of India’s e-commerce boom. This strategic positioning will be crucial as the market continues to evolve and consumer expectations grow increasingly sophisticated.

The Evolution of Global Air Cargo: Technology and the Ecosystem

The global air cargo industry has made significant strides in integrating advanced technologies and communication systems to streamline operations, enhance efficiency, and improve service delivery. This evolution is crucial in the context of a sector that is pivotal to global trade, supporting economies and industries worldwide by enabling the rapid movement of goods. The International Air Transport Association (IATA) plays a central role in this transformation through its development of frameworks and standards that promote interoperability and efficiency. Despite these advancements, there is still much to be done to achieve a fully integrated, seamless global air cargo network.

The air cargo industry has embraced a range of technologies that have transformed various aspects of its operations:

  • Digitalization of Processes: The shift from paper-based to electronic documentation is one of the most significant changes. Electronic Air Waybills (e-AWBs) are now the standard, reducing paperwork, improving data accuracy, and speeding up cargo processing times.
  • Real-Time Tracking and Visibility: Technologies such as RFID, GPS, and IoT sensors are widely used to monitor cargo across the supply chain. These tools provide real-time updates on the location and condition of goods, enhancing transparency and enabling proactive management of shipments.
  • Automation and Robotics: Automated guided vehicles (AGVs), robotic arms, and drones are increasingly common in cargo handling and sorting operations. These reduce human error, increase handling capacity, and improve safety at cargo facilities.
  • Artificial Intelligence and Machine Learning: AI is used for predictive analytics, capacity planning, and demand forecasting. Machine learning algorithms analyze historical data to optimize flight routes, manage cargo loads, and predict maintenance requirements.

IATA has been instrumental in promoting technology adoption through its various initiatives:

  • IATA’s Cargo-XML messaging standard: This standard is designed to modernize and replace the older Cargo-IMP standard, offering greater data consistency and facilitating easier integration with modern systems.
  • ONE Record: An initiative aimed at creating a single record view of the shipment that can be shared across all stakeholders through a secure data-sharing platform. It leverages API technology to enhance data accessibility and interoperability.
  • e-freight: This project aims at eliminating paper-based processes in air cargo and replacing them with electronic procedures, thus simplifying the supply chain and reducing operational costs.

These frameworks and standards are critical for harmonizing operations across the global air cargo network, facilitating smoother and faster transactions, and improving compliance with global trade regulations.

Despite these advancements, the air cargo industry faces several challenges that need to be addressed to further enhance technological integration:

  • Global Standardization: While IATA standards have been widely adopted, discrepancies in technology adoption rates and regulatory environments across different countries still pose challenges to seamless global operations.
  • Cybersecurity: As the industry becomes increasingly digital, it also becomes more vulnerable to cyber threats. Ensuring the security of digital platforms and protecting sensitive data is paramount.
  • Sustainability: Incorporating green technologies and reducing the carbon footprint of air cargo operations is becoming increasingly important. More work is needed to integrate sustainable practices, including the use of SAF and electric or hybrid aircraft.
  • Collaboration and Data Sharing: While technology has improved, the full potential of a connected air cargo community can only be realized through better collaboration and data sharing among all stakeholders.

The evolution of technology and systems in global air cargo has significantly transformed the industry, making it more efficient and responsive. Through the efforts of IATA and other stakeholders, substantial progress has been made in digitalization and automation. However, the journey towards a fully integrated, globally standardized, and sustainable air cargo industry continues. Ongoing investment in technology, commitment to global standards, and collaboration across the industry are essential to addressing the remaining challenges and leveraging future opportunities.

What I learned at WCS: E-Commerce is the Tailwind for Air Cargo

The digital revolution has ushered in a new era of commerce, one where the boundaries of global trade are increasingly defined by the clicks of consumers rather than the traditional brick-and-mortar constraints. E-commerce has not only changed the way we shop but has also significantly impacted the logistics and air cargo industries. The International Air Transport Association (IATA) and insights from the World Cargo Symposium (WCS) provide a comprehensive look into how e-commerce shapes the future of air cargo, emphasizing the surge in cross-border transactions and the individual growth statistics within e-commerce.

E-commerce’s growth trajectory has been nothing short of phenomenal, influencing a wide array of sectors, with air cargo being one of the most significantly impacted. According to IATA, the demand for air cargo is experiencing an upward trend, largely fueled by the e-commerce boom. This is particularly evident in cross-border e-commerce, which has expanded the global marketplace, allowing consumers to purchase goods from any corner of the world. The convenience, speed, and broad product offerings available through e-commerce platforms are driving an ever-increasing volume of international shipments, necessitating efficient and reliable air cargo services to meet consumer expectations.

Publications covering the WCS further delve into the nuances of e-commerce’s impact on air cargo. They highlight that as consumers increasingly turn to online shopping for both domestic and international purchases, the logistics sector is undergoing a transformative shift. “According to IATA, one out of every five parcelled items currently transported has been purchased online, and the figure is set to grow to one in three by 2027.”  Traditional bulk freight is being complemented, and in some cases replaced, by the need to transport smaller packages to individual consumers. This shift requires air cargo carriers to adapt their operations, from how they manage cargo space to how they prioritize shipments, to accommodate the faster-paced e-commerce environment.

Cross-border e-commerce, in particular, presents unique challenges for the air cargo industry, according to Statista, it will be a $7.9 trillion market by the year 2030. It not only increases the volume of goods being shipped via air but also introduces complexities related to customs, international regulations, and the need for enhanced security measures. Despite these challenges, cross-border e-commerce offers significant opportunities for air cargo operators willing to innovate and adapt to the demands of the digital age. As detailed in WCS publications, companies that invest in technology to streamline customs clearance, improve package tracking, and optimize their logistics networks are well-positioned to capitalize on the growth of international e-commerce.

Statistics on individual e-commerce transactions underscore the scale of change. IATA data suggests that the percentage of goods purchased online and shipped via air is on a steady incline, with e-commerce expected to account for a larger share of air cargo volume in the coming years. This increase is not just in volume but also in the value of goods transported, reflecting the growing consumer trust in online shopping for high-value items.

The rise of e-commerce has indeed brought about a paradigm shift in the air cargo industry. To keep pace with this change, stakeholders across the spectrum—from airlines to freight forwarders to customs authorities—are reevaluating their strategies and operations. E-commerce will grow into a third of all air cargo volume by 2027 according to reporting from Air Cargo News. Innovations in logistics technology, such as automated warehousing, blockchain for secure and transparent transactions, and AI for predictive logistics, are becoming increasingly critical.

The symbiotic relationship between e-commerce and air cargo is shaping a new landscape for global trade. The insights from IATA and the discussions at the WCS highlight the challenges and opportunities this relationship presents. As e-commerce continues to grow, its impact on air cargo will only become more pronounced, driving further innovations and adaptations in the industry. The future of air cargo, intertwined with the fate of e-commerce, promises a journey of transformation, driven by the relentless pace of digital advancement.

Navigating the Skies: Digitalization in Air Cargo

In the fast-paced world of global trade and logistics, digitalization has emerged as a transformative force, revolutionizing the way air cargo operations are conducted across the globe. From streamlined processes to enhanced efficiency, the benefits of embracing digital technologies in the air cargo industry are numerous, promising a future of innovation and growth. However, amidst these promises lie several impediments that must be addressed to fully realize the potential of digitalization.

Digitalization in air cargo holds immense promise, with statistics painting a compelling picture of its benefits. According to the International Air Transport Association (IATA), air cargo volumes have steadily grown over the past decade, with a significant portion of this growth attributed to e-commerce. In fact, IATA predicts that air cargo will continue to play a crucial role in supporting global trade, particularly as consumer demand for fast and reliable delivery services increases.

One of the primary benefits of digitalization in air cargo is improved efficiency and operational transparency. By leveraging digital technologies such as blockchain, cloud computing, and Internet of Things (IoT) devices, stakeholders across the supply chain can gain real-time visibility into shipments, enabling better tracking and monitoring of goods. This not only enhances the overall customer experience but also reduces the risk of delays and disruptions.

Furthermore, digitalization facilitates data-driven decision-making, allowing airlines and logistics providers to optimize route planning, cargo loading, and resource allocation. This not only minimizes costs but also reduces the environmental footprint of air cargo operations, contributing to sustainability efforts in the industry.

Another key advantage of digitalization is the automation of manual processes, leading to increased productivity and reduced human error. For example, digital platforms can automate documentation and customs clearance procedures, streamlining the flow of goods through border crossings and reducing paperwork burdens for stakeholders.

Despite these compelling benefits, several impediments stand in the way of fully realizing the potential of digitalization in air cargo. One major challenge is the lack of standardization and interoperability among digital systems used by different stakeholders in the supply chain. Without common standards and protocols, data exchange and integration become cumbersome, hindering the seamless flow of information.

Additionally, concerns around data security and privacy pose significant barriers to the adoption of digital technologies. With sensitive cargo information being transmitted across digital networks, the risk of cyber threats and data breaches looms large. Addressing these concerns requires robust cybersecurity measures and industry-wide collaboration to establish trust and confidence in digital platforms.

Moreover, the upfront costs associated with implementing digital solutions can be prohibitive for smaller players in the air cargo industry, particularly in developing countries. Without adequate resources and infrastructure, these stakeholders may struggle to keep pace with larger competitors who have greater financial capabilities.

In conclusion, digitalization holds immense promise for transforming air cargo operations on a global scale. From improved efficiency and transparency to enhanced decision-making and productivity, the benefits are clear. However, addressing the challenges of standardization, cybersecurity, and affordability is crucial to unlocking the full potential of digitalization and ensuring its widespread adoption across the industry. By overcoming these impediments, the air cargo sector can embrace digitalization as a catalyst for innovation and growth in the years to come.

Air Cargo in Middle East and Africa – A Great Opportunity

Growing Fast 

Air cargo has become a pivotal element in the global logistics and transportation sector, especially in regions like the Middle East and Africa. These regions are experiencing significant growth due to strategic geographic locations, rising e-commerce, and investments in infrastructure development. This blog explores the current state, growth projections, and the burgeoning e-commerce sector’s impact on air cargo in the Middle East and Africa, highlighting why these regions hold immense opportunities for the industry.

The Middle East, with its central geographic location, acts as a critical bridge between the East and the West. This advantage is not just geographical but also economic, facilitating quicker trade routes and enabling the region to become a hub for international air cargo operations. Similarly, Africa’s vast landscape and developing economies are opening new avenues for air cargo, especially with the continent’s increasing integration into global supply chains.

Recent reports and analyses predict a strong growth trajectory for the air cargo sector in these regions. The International Air Transport Association (IATA) has highlighted the resilience and potential for significant growth in air cargo, noting that markets in the Middle East and Africa are poised to expand rapidly. This is attributed to the ongoing investments in airport infrastructure, the expansion of fleets by local carriers, and the strategic partnerships being formed between global and regional logistics companies.

For instance, the Middle East is expected to see an annual growth rate of 4.4% in air cargo over the next two decades, while Africa is forecasted to experience an even more robust growth rate of 5.0%, according to the IATA. These figures underscore the optimistic outlook for the air cargo industry in these regions, driven by both intra-regional and international trade demands.

E-commerce is a significant driver of air cargo growth, with the Middle East and Africa witnessing exponential increases in online retail. The surge in digital platforms, increased internet penetration, and the young, tech-savvy populations are fueling e-commerce growth, subsequently boosting air cargo demand. According to Deloitte e-commerce in the middle East is expected to climb to $50 billion by 2025. And Africa e-commerce should surpass $50 billion in 2028 – in both regions there is a great opportunity resulting from e-commerce.

The combination of strategic location, growing e-commerce, and growth projections presents vast opportunities for countries in the Middle East and Africa. These regions can leverage their unique positions to become global leaders in air cargo logistics. With continued investment in infrastructure, technology adoption, and regulatory support, the air cargo sector can significantly contribute to economic diversification and sustainable growth.

Moreover, the rise of e-commerce presents an opportunity for local businesses to expand their reach globally, requiring efficient logistics and air cargo services to meet consumer expectations for fast and reliable delivery. This demand can spur innovation in the sector, including the adoption of green technologies, digitalization of customs processes, and the use of blockchain for tracking and security, setting new standards for global air cargo operations.

The air cargo industry in the Middle East and Africa is at a pivotal point, with significant growth projections and e-commerce expansions signaling a bright future. The strategic geographic locations of these regions, coupled with ongoing investments and innovations, are creating a fertile ground for air cargo to thrive. By capitalizing on these opportunities, the Middle East and Africa can not only enhance their positions in the global logistics and transportation network but also drive broader economic growth and development.

Air Cargo Market Modest Growth for 2024

Air Cargo Market Modest Growth for 2024

As we head into the year, we have been speaking about the industry and now a bit more detail on the expected forecast. The air cargo industry is expected to experience a growth of 4.5% in 2024, according to the International Air Transport Association (IATA). This projection is in line with the International Monetary Fund’s forecast of a 3.5% increase in global trade, despite an estimated 3.8% fall in airfreight demand in the previous year. The growth is seen as a rebound from the recent decline, particularly in 2023, where air cargo has been decreasing, especially with a 3.8% decline.

Regionally, the growth rates vary. African carriers are anticipated to see a 1.5% increase in cargo demand, with Asia Pacific at 3.6%, Europe at 4.1%, Latin America at 7.7%, the Middle East leading with a 12.3% increase, and North America at 2.1%. Despite these growth expectations, the industry faces challenges, including geopolitical risks and economic uncertainties. These factors make predictions for 2024 difficult, and they could affect cargo capacity, especially if passenger services are reduced due to instability and higher fuel prices.

Furthermore, IATA expects cargo revenues to decline by 17.3% year-on-year in 2024 to $111.4 billion, influenced by falling yields due to increased belly capacity from passenger flights and stagnant trade. However, these yields are still expected to remain higher than historical standards. The decline in revenue this year is attributed to weaker demand, lower yields, improved ocean shipping reliability, and the return of belly capacity.

The global economic and geopolitical situation remains a concern for the industry. Experts suggest that the air cargo market might only pick up by the fourth quarter of 2024 at the earliest. The recovery is contingent on factors like geopolitical stability and central banks’ focus on growth over inflation. The industry also anticipates some volatility due to these various factors, but a small growth compared to the current year is expected. Notably, Hong Kong’s air cargo sector is likely to benefit from the full opening of its three-runway system in the coming year.

One of the key challenges facing the air cargo industry is the fluctuation in demand due to various global factors. Geopolitical tensions, wars, and conflicts can significantly impact the industry. For instance, the ongoing situation in the Middle East has delayed the recovery of air cargo by about a year. Additionally, passenger travel demands, and extreme weather conditions could also influence cargo capacity. A reduction in passenger services, often due to instability or higher fuel prices, can lead to a lack of available space in the belly hold of passenger aircraft, which is often used for cargo. This situation could benefit freighter operators, as they might pick up the slack caused by the reduced belly hold space.

However, it’s important to note that these projections are based on various assumptions, including GDP growth, inflation rates, interest rates, the strength of the US dollar, unemployment levels, jet fuel prices, recovery pace in China, and the state of global conflicts. Any significant changes in these factors could alter the projected growth rates.

In summary, while the Air cargo industry is expected to grow in 2024, this growth will be modest and subject to various global economic and geopolitical factors. Regions like the Middle East and Latin America are expected to see higher growth rates compared to other parts of the world. However, the industry must navigate through challenges such as geopolitical tensions, changes in passenger travel demands, and other global economic factors. However, these challenges are nothing new for this industry and the experts who build, manage, and innovate.

 

The Cross-border e-Commerce Opportunity

Cross-border e-commerce, a segment of online shopping that involves consumers buying products from sellers in other countries, has experienced significant growth in recent years. This market is reshaping how consumers and businesses approach international trade, offering new opportunities and challenges alike.

Market Size and Financial Outlook

The cross-border e-commerce market was valued at several hundred billion dollars, with expectations for continuous growth. According to Statista, it will be a $7.9 trillion market by the year 2030. factors contributing to this growth include increasing internet penetration, advancements in e-commerce technology, and a growing middle class with a taste for foreign products. The United States, China, and the European Union are among the leading players in this market, contributing significantly to both import and export activities.

Demand by World Region

Asia-Pacific is a powerhouse in cross-border e-commerce, led by China. The rising middle class in countries like China, India, and Southeast Asia is driving up demand for foreign products, especially from the U.S. and Europe.

North America, particularly the U.S. and Canada, stands out as major destinations for cross-border online shopping. American consumers exhibit a strong preference for unique products from Europe and Asia, including electronics, fashion, and beauty products.

Europe sees a keen interest from consumers in purchasing high-quality goods from the U.S. and Asia. The European market is characterized by its demand for luxury goods, electronics, and culturally unique items.

In Latin America, there is a growing interest in cross-border e-commerce, with a particular focus on products from the U.S. and China. The demand in this region spans various goods, including electronics, fashion, and health products.

The Middle East and Africa, though a relatively smaller market, are experiencing rapid growth. The demand in this region is for high-end luxury goods, electronics, and products not readily available locally.

Data and Trends

According to reports from the U.S. International Trade Administration and various market research firms, several trends are shaping the future of cross-border e-commerce.

The evolving landscape of consumer preferences reflects a growing global demand for authentic and distinctive products sourced from international markets. This trend is driving an upswing in cross-border transactions as consumers actively seek out unique offerings.

Advances in technology and infrastructure are transforming the cross-border shopping experience. Enhanced e-Commerce platforms streamlined payment gateways, and efficient logistics systems collectively contribute to simplifying the process for consumers to access and purchase products from overseas.

Governments around the world are proactively addressing the challenges of cross-border trade by refining customs and tax procedures. This concerted effort aims to create a more fluid regulatory environment, facilitating smoother transactions and fostering international trade relations.

E-commerce platforms are adapting to the global marketplace by localizing their content. This includes language translation features and the integration of local payment methods to offer international customers a more personalized and seamless shopping experience.

Despite the promising growth, cross-border e-commerce faces challenges like shipping costs, customs duties, and longer delivery times. Additionally, businesses must navigate various regulatory environments and cultural differences to succeed in global markets.

Cross-border e-commerce is not just a transient trend but a significant component of global trade. With technological advancements and evolving consumer preferences, this market is poised for further growth. Businesses and governments must adapt to these changes, ensuring efficient and consumer-friendly trade practices to thrive in this dynamic environment.

The Evolving Landscape of Air Cargo in 2024

Air cargo is a vital cog in the wheel of global commerce, demonstrating a remarkable capacity for resilience through the ebbs and flows of recent times. The onslaught of the COVID-19 pandemic precipitated a dramatic downturn in air cargo volumes as passenger flights, traditionally doubling as cargo carriers, were drastically curtailed. Yet, this downturn set the stage for a robust resurgence, fueled by the meteoric rise of e-commerce and the ripple effects of disruption in alternative freight modes, such as sea freight.

The International Air Transport Association (IATA) reported a hearty rebound in air cargo volumes in 2022, notching up a growth rate of about 6.9% over the pre-pandemic figures of 2019. This rebound is a testament to the sector’s agility and its ability to pivot in response to global shifts.

A myriad of dynamics are steering the growth of the air cargo industry:

  • E-commerce Expansion: The e-commerce explosion is driving an insatiable appetite for expedited delivery, directly benefiting the air cargo sector.
  • Supply Chain Diversification: Risk mitigation strategies are leading companies to diversify supply chains, increasingly relying on the speed and dependability of air cargo services.
  • Technological Evolution: Breakthroughs in aircraft technology, logistics software, and process automation are propelling air cargo into new heights of efficiency and cost-effectiveness.
  • Sustainability Initiatives: The logistics domain is increasingly embracing sustainability, advancing towards greener aircraft and practices.

As we cast our gaze towards 2024, the air cargo industry is poised to maintain its upward trajectory, albeit at a tempered pace when juxtaposed with the immediate recovery post-pandemic. Projections for 2024 indicate:

  • Stable Volume Growth: IATA anticipates a consistent increase in air cargo volumes, forecasting a rise in the vicinity of 4-5% for 2024 relative to 2023.
  • Enhanced Capacity: With passenger air travel rebounding to pre-pandemic levels, the reintroduction of belly capacity is set to augment existing freighter capacities.
  • Sustained Efficiency and Eco-Friendly Focus: Strategic investments in cutting-edge, fuel-efficient aircraft and the adoption of sustainable aviation fuels (SAFs) are expected to play a pivotal role in diminishing the carbon footprint of air cargo.
  • Technological Synergy: The industry is on the cusp of a digital revolution, with AI and blockchain integration anticipated to streamline tracking, optimize efficiency, and fortify security.

While the air cargo grapples with the volatility of fuel costs, geopolitical instability, and pressing environmental concerns, these very challenges are paving avenues for inventive progress. The industry is on track to leverage AI enhancements and system advancements to drive cargo operations with greater efficiency and effectiveness. Furthermore, businesses are poised to tap into burgeoning revenue streams through cross-border and domestic e-commerce initiatives.

In summation, the 2024 forecast paints an optimistic picture for the air cargo industry, anchored by consistent growth, technological breakthroughs, e-commerce expansion, and a steadfast commitment to sustainable operations. Amidst the flux of global trade, air cargo is set to remain an indispensable link, continually evolving, and innovating to rise to the occasion of the ever-shifting market demands and obstacles.

 

Revolutionizing E-commerce Delivery with Last-Mile Innovations

In today’s fast-paced digital world, consumers expect swift, reliable, and efficient delivery services. The exponential growth of e-commerce platforms and the increasing demand for instant gratification have made delivery logistics a critical business aspect. This is where our solution, a technology transforming the way businesses think about delivery, can be leveraged, especially in the crucial “last mile” segment. Let’s delve into how SmartKargo is leveraging innovative last-mile and other technologies to redefine e-commerce delivery.

SmartKargo is designed to simplify air cargo operations, making them faster and more efficient. It provides real-time visibility, mobile capabilities, and seamless integration with other systems. Airlines can leverage the solution to ship e-commerce packages via their planes and use the SmartKargo solution for the entire delivery process from dock-to-door. The last mile, meanwhile, pertains to the final step of the e-commerce or small package delivery process, where a product is delivered from a local distribution center to the end consumer. It’s this segment that often presents the most challenges but also the greatest opportunities for differentiation.

One of SmartKargo’s standout features is its real-time tracking capabilities. In the e-commerce world, consumers want to know exactly where their packages are and when they’ll arrive. With SmartKargo’s sophisticated tracking algorithms, customers are granted a comprehensive view of their package’s journey. This not only boosts consumer trust but also reduces the number of customer service queries related to shipment whereabouts.

SmartKargo is not a standalone solution. Its strength is magnified when integrated with other innovative last-mile technologies. Our system integrates easily with insurance carriers, transportation management, warehouses, and other important e-commerce logistics systems. By integrating with such technologies, SmartKargo ensures that businesses can offer varied delivery options.

Another jewel in the SmartKargo crown is its ability to utilize AI for route optimization. By analyzing vast amounts of data, the technology can predict potential delays, factor in real-time traffic conditions, and determine the quickest, most efficient routes for delivery. This ensures that parcels arrive promptly, keeping customers satisfied and reducing operational costs.

At the heart of all technological innovation in the e-commerce space is the customer experience. SmartKargo understands this. By providing consumers with accurate delivery windows, multiple delivery options, and the peace of mind that comes with real-time tracking, it ensures that e-commerce businesses can offer an experience that meets, if not exceeds, customer expectations.

In the constantly evolving landscape of e-commerce, businesses need every advantage they can get. SmartKargo, with its emphasis on efficiency, integration, and customer experience, provides e-commerce companies with a robust solution to address the complexities of modern-day deliveries. As last-mile delivery technologies and others in the logistics ecosystem continue to evolve, integrating solutions like SmartKargo will be crucial for businesses seeking to stay ahead of the curve and deliver unparalleled customer delivery experiences.

 

CFOs Need eCommerce Air Cargo Revenue

It’s been a tough year for airlines – and that’s an understatement. CFOs are in the middle of the madness. Whether it is getting loans, working with local and federal governments, looking ahead to 2022, raising capital, or diving strategic decisions with their executive team, CFOs are busy. The lack of planes in the air has caused revenue shortages that have directly impacted CFO decisions. Air cargo is a great way to bridge the revenue gap, drive more revenue in the near term while diversifying revenue streams for the future.

All airline CFOs model for risks, for all kinds of scenarios from terrorist attacks to major market issues. But no one was ready for 2020 and the pandemic. All risk modeling essentially failed to help the CFO manage the crisis. The biggest issue faced was with the long-term assets of the plane and the lack of cash flow needed to keep the company afloat. Gerald Laderman, the CFO of United, said “Before COVID, we modeled our worst-case scenarios based on the financial impact of 9/11, followed by a recession,” – “It turns out we weren’t even close.”[1] In other words, the epidemic was far worse than any company or any airline analyst could ever have predicted.

Passenger airlines saw their passenger yields cave and the CFO had to do what is necessary to survive. But the airlines that chose to maximize cargo, especially e-commerce cargo as an additional revenue stream, did far better during the pandemic. Some airlines pivoted toward cargo to drive revenue. United and American grew their cargo revenues by 77% and 32% respectively.[2] Now, the expected total sales in e-commerce globally will grow from an estimated $5 trillion sales globally this year to a projected $6.4 trillion in 2024.

Many airlines even converted passenger planes to cargo planes to generate replacement revenue. A great example of this is Emirates. They converted 10 Boeing 777-300ER planes to all-cargo airplanes.[3] Companies like Emirates employ a nimble business model that allows them to take advantage of whatever market conditions may present both the passenger and cargo business. This flexibility is what CFOs should be advocating for in the future.

Airlines need to have a model that takes full advantage of their fixed assets, given a wide variety of risks, and market scenarios. This, unfortunately, must include the next pandemic. CFOs should be able to take advantage of the tremendous growth in e-commerce shipping and delivery to ensure revenue capabilities. Whether it’s cargo utilizing excess belly capacity on passenger airlines or all-cargo flights, the business drives yields and overall margin that can help to ensure revenues and drive sustained growth.

Air Cargo the Engine of eCommerce?

The e-commerce ecosystem is massive and growing. The expected total sales in e-commerce globally will grow from an estimated $5 trillion sales globally this year to a projected $6.4 trillion in 2024. The ecosystem is vast and is comprised of services, MarTech, AdTech, e-commerce systems, shipping and logistics, payments, communications and so many other factors that support the system. And, as the issue in the Suez Canal recently demonstrated, Air Cargo may be more important to the global supply chain than you first considered.

Most e-commerce retailers are striving to keep up with Amazon and they all want to be customer-focused. Being customer-focused means maniacal attention to customer needs and responding to their desires. When taking shipping into account, there are differences in what e-commerce customers will pay for with respect to shipping, but all customers want their “packages” fast.

Now, what do we mean by fast? Anything delivered in 2 days or less is considered fast. Moreover, Gen Z, on track to be the largest consumer base by 2026, and Millennials, who are the largest consumer base today, are willing to pay more for next-day shipping. In fact, recent studies by both PwC and Accenture show that higher prices for next-day delivery would drive a decision to make a purchase.

Now, it should be very evident that Air Cargo is the best, and in many cases, the only option for getting packages to the customer in 2 days or less. Cargo ships are the cheapest, and slowest, mode of cargo transport (and in many cases the right option). Air Cargo may be more expensive, but if an e-commerce company has based the fulfillment of their brand promise on fast delivery—then Air Cargo is key to their success.

As more and more e-commerce companies adopt faster package delivery to meet customer expectations and drive repeat purchases, there will be greater demand for Air Cargo. Air Cargo can be executed by all-cargo carriers like UPS, FedEx, and DHL who also rely on the belly capacity of passenger airlines. Azul is a great example of an airline that embraced e-commerce growth by implementing the technology to operate fully integrated logistics. Thus, meeting the demand for e-commerce shipping while optimizing the utilization of the entire fleet.

Customer expectations will only become more demanding, and the need for flexibility and speed by e-commerce companies to get packages from the shopping site to the customers’ door is paramount to their success. Air Cargo may just be the engine that drives e-commerce by facilitating this need for speed that customers demand.

Will there be a Permanent Hole in Airline Revenue?

It is redundant to say that 2020 was a difficult year.  And 2021, we all know, is on the upswing.  Many of us believe that 2022 will be a complete reversion to “normal.”  I do believe on a personal level we will start to go back to normal vacations, dining out, movies, concerts and etc. Humans are social and we crave to be a part of a group and shared experiences.  However, the business traveler will not be coming back at anywhere near the previous level—meaning that airlines will need to fill the revenue gap to meet their financial projections.

If we look at the work from home movement, it has changed the way we sell, service, and interact with our peers.  Moreover, it has shown that there is no need to always be in the office and no need to always travel to meet peers, prospects, or customers. The growth in applications that use camera applications has grown tremendously, for instance, Microsoft Teams grew from “44 million active users in March to 75 million by April.”[1]  Additionally, Zoom has also experienced tremendous growth of in December 2019 they had 10 million daily users compared to today there are about 300 million daily users.[2]  Another factor pointing to the “Work from Home movement”, is during 2020 computer sales grew 11% globally, 14% in the United States, most of these were laptops suggesting these were bought in further support of working from home.[3]  All of these factors point to a change in the way business is done.

We all know the huge impact to the airlines from Covid in 2020 and 2021  In 2020, airline traffic was down 67% compared to 2019.[4]  Moreover, some experts do not think all passenger airlines will recover until 2024 or 2025.[5]  Now business traffic is about 12% of total traffic but historically has brought in double the revenue of other types of air travelers.[6]  All of that that revenue will not be coming back – business air travelers will use applications to make deals, collaborate and build relationships online.  We will certainly see the return of some business travel.  I agree with Bill Gates that only about 50% of business travel will return.[7]  If there is a 50% reduction, many airlines are going to be searching for new revenue or face permanent cuts and write-offs.

Airlines can drive more revenue by embracing the growth in e-commerce shipping. Reduced capacity of passenger airlines is an opportunity to ship cargo and drive easy alternative revenue, which will help to fill the hole in passenger revenue.  Moreover, it can be a stop-gap measure for additional revenue until leisure travelers are back in 2024 and beyond.  Whether Airlines are doing it on their own or using a leading platform like SmartKargo, there is tremendous revenue to be made from creating a balanced revenue stream for any airline.

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[1] https://www.businessofapps.com/data/microsoft-teams-statistics/
[2] https://www.techrepublic.com/ /watch-out-zoom- article microsoft-teams-now-has-more-than-115-million-daily-users/#:~:text=Zoom%20and%20Google%20Meet%20have,logging%20into%20meetings%20every%20day.
[3] https://qz.com/1881730/us-computer-sales-spiked-67-percent-after-switch-to-remote-work/
[4] https://www.cnbc.com/2021/01/04/21-years-of-airline-passenger-traffic-growth-erased-in-2020-travel-report.html
[5] https://www.cnbc.com/2021/01/04/21-years-of-airline-passenger-traffic-growth-erased-in-2020-travel-report.html
[6] https://4-seasonslimos.com/travel-tips/what-percentage-of-air-travel-is-for-business/
[7] https://www.cnbc.com/2020/12/17/will-business-travel-return-with-covid-vaccine-executives-are-split.html

E-COMMERCE LOGISTICS

WHAT DOES IT TAKE TO GET INTO THE GAME?

 

The huge growth of e-commerce logistics is causing many airlines to rethink their business models and make the adjustments needed to meet skyrocketing market opportunity. There’s never been a better time to open new streams of revenue on both long-haul and domestic flights, especially as airline passenger revenues are down, way down.

eCommerce cargo shipments pay big dividends in higher yields per kilogram vs general cargo—and, all of this is driven by the need for speed in transport and delivery—from the shopping site to the customer’s door.

Here are 5 things you should know:

1. Airplanes are the most important assets in cross-border e-Commerce.
More than ever, e-Commerce shipping relies on the speed and capacity that global airlines can provide and that consumers demand. Airlines have both the fleet capacity and speed capability to meet the huge, and growing, demand of e-commerce logistics.

2. Fully integrated logistics is driven by smart integrations.
By connecting your Airline Assets + Technology + Ground partners, you can deliver higher revenues to the airline bottom line. The SmartKargo e-commerce solution can be integrated into the existing technology environment of an airline. Our team facilitates the EDI-messaging integrations with all members in the logistics chain.

3. Smart technology + mobile applications automate the process.
The end-to-end EDI-enabled B2B and B2C e-Commerce integration combines with real-time data visibility and transparency via mobile applications for the shipper, driver and end customer, all the way from the shopping site to the door.

4. The solution is live and producing great results.
One of the first airlines to adopt the SmartKargo e-Commerce solution has announced amazing revenue growth. Its current market share of 60% in e-commerce logistics vs. the integrators in that country illustrates that the SmartKargo technology and process for e-commerce logistics are proven. The solution is now being adopted by other forward-looking carriers across the world.

5. The technology can be deployed quickly.
The SmartKargo e-commerce solution can be up and running in less than a year—equipping an airline to get into the game – where consumer demand for speed in delivery drives higher revenue and premium yields. And airlines can operate e-commerce alongside their traditional B2B Air Cargo business.

So, why wait? Contact us today to learn how smart airlines are maximizing air cargo revenues with the world’s first, live e-commerce integration. For more information or to set up a demo, contact sales@smartkargo.com or visit www.smartkargo.com.

Learn more

Forbes Article

On-demand Flight Global Webinar