In recent times, the air freight sector has been undergoing a dramatic shift, as ecommerce traffic continues to expand at an unprecedented rate. It is currently estimated that 50% of airline cargo capacity is occupied by the ecommerce market, which saw a remarkable 30% growth in 2023 alone.
This growth in utilisation cannot be ignored by regular shippers on the air freight market. It presents both opportunities and challenges. As a logistics professional, it's imperative to understand the implications of this trend and adapt your shipping behaviour accordingly to stay competitive and efficient.
“Ecommerce traffic is now such a large part of total air freight transportation, it cannot be ignored. Shippers who adjust their strategic approach in response to this emerging trend will be the ones enjoying competitive advantage in the years ahead.”
Gerry Power, UK Country Director, WTA
What is the growth of ecommerce in air freight?
The growth of air freight utilisation by ecommerce refers to the increasing volume of goods transported by air which have been sold to consumers shopping online.
Typically, air freight has been a sector mostly used by shippers of high value or perishable items, where time is of huge sensitivity. But growing ecommerce traffic is challenging that.
Major ecommerce giants like Amazon, Alibaba, and eBay are at the forefront of this trend, leveraging air freight to meet the demand for fast delivery times. In the case of Alibaba, such is their influence on the sector, they’re working with Hong Kong airport in the development of their new logistics hub.
The types of goods being moved for ecommerce sales is challenging typical air freight norms too. No longer is air freight an exclusive transport option for high value and perishable items like food and pharmaceuticals. With ecommerce, a whole range of low-value goods are finding their way onto airplanes.
Several factors are contributing to the rising use of air freight for ecommerce:
- Consumer Expectations: With the advent of same-day and next-day delivery services, consumers have come to expect faster and reliable shipping times.
- Global Reach: Ecommerce platforms are expanding their reach to international markets, which require efficient cross-border logistics solutions.
- Inventory Management: Air freight allows companies to maintain lower inventory levels by replenishing stock quickly, thereby reducing warehousing costs.
Future growth projections and market forecasts for ecommerce
The growth trajectory of the ecommerce air freight market shows no signs of slowing down. Industry analyst Technavio is expecting the air cargo market will grow by 19.5m tons between 2022 and 2027, which is approximately an annual growth rate of 5.3% during the forecast period, with ecommerce being a significant driver.
The global ecommerce market will exceed $6 trillion in 2024, according to eMarketer, further fuelling the demand for air freight services.
Although some in the logistics industry have cast doubt over whether ecommerce's dominance over air freight will continue, market forecasts at present suggest it will.
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Strategic recommendations for shippers in the wake of increasing ecommerce traffic
Given the rising demand for air freight driven by ecommerce, shippers need to adapt their strategies to ensure efficiency and competitiveness. Here are some key recommendations:
1. Book cargo space early
Ecommerce companies are gaining a reputation for booking air freight space well in advance. Particularly in anticipation of peak seasons like Christmas. Therefore, it’s crucial for shippers to secure their slots early.
Late bookings generally result in higher costs and potential delays. To mitigate these risks, plan your shipments ahead of time and reserve cargo space as soon as possible.
Use data from previous years to map out shipments you can be certain of, far in advance.
2. Partner with an established freight forwarder
Navigating international shipping is challenging, especially in a market with tight capacity. Partnering with a reputable freight forwarder who has long and established relationships with airlines can be vital to success.
These forwarders can negotiate better rates, secure necessary space, and provide expertise in handling customs regulations and documentation.
They can also offer guidance on navigating the challenges which invariably crop up.
In the competitive logistics space, it’s typical for every provider to promise expertise and strong relationships with airlines, so how do you differentiate? Well, there are a few indicators:
- Express an interest in a consultancy meeting to explore options and see how they respond.
- Look for Trustpilot or Google reviews and website case studies. There is no greater social proof than other customers.
- Explore their content or resources catalogue on the website to see if they’re providing public information for shippers. Do they send out weekly newsletters to keep their customers informed on industry changes?
3. Use visibility tools for supply chain management
In a highly competitive market, optimising your supply chain is essential. Implementing a visibility tool allows you to track various data points across your logistics network. This includes real-time tracking of shipments.
But in the case of air freight, the crucial data is the cost and timing information. With visibility, you have granular detail on logistics costs and timeframes laid out before your eyes. You can see which routes or airlines are causing bloated costs or slow processing times. Receive advanced warning of shipments where there is a threat of additional costs. View all documentation related to shipments. Check ETA’s. Set reminders and automatic notifications.
By analysing this data, you can identify inefficiencies and areas where costs can be reduced, leading to improved operational performance and cost savings.
“There is scepticism towards the power of visibility from those in the air freight sector, because seeing where your goods are on a map isn’t hugely valuable when your dealing with transit times of only a few hours.
But the value here is in the data shippers get access to. All information related to a supply chain is tracked and graphed automatically. Making the correct decision to optimise logistics becomes effortless.”
Alan Newton, Head of Air Freight
4. Explore alternative routing options
Major airports often face congestion, leading to delays and higher costs. Consider using alternative, less congested airports or secondary hubs that can offer more competitive rates and faster processing times.
Additionally, exploring alternative routes that bypass busy corridors can provide cost and time advantages. Collaborate with your freight forwarder to identify and potentially exploit these options.
Be aware of threats to de minimis thresholds
The surge in low-value ecommerce shipments poses a potential threat to the de minimis thresholds, which are the values below which goods can be imported without incurring customs duties.
In the UK, this threshold is £135, while in the EU it is €150 and, in the USA, a whopping $800. Data from the US Customs and Border Protection (CBP) shows 880.2 million de minimis bills of lading were submitted from air transportation last year, with 332.5 million recorded already in Q1 of 2024. The Loadstar reported that this trend represented $67 billion in lost tax revenue, raising concerns that governments may lower these thresholds to recoup lost revenue.
Shippers need to be mindful of these changing and stay informed on any changes.
There’s no doubt, the explosive growth of ecommerce is reshaping the air freight market, creating both challenges and opportunities for shippers.
To navigate this evolving landscape, shippers should book cargo space early, collaborate with experienced freight forwarders and leverage visibility tools for supply chain optimization such as the WTA Platform. By implementing these strategies, shippers can enhance their efficiency, reduce costs, and maintain a competitive edge in the dynamic world of international ecommerce logistics.
Through staying proactive and adaptive, shippers can effectively manage the increasing demands of the ecommerce sector, ensuring timely deliveries and satisfied customers in a rapidly changing market. For guidance on navigating these challenges for your exact circumstances, get in touch.
