AIR CARG O WEEK
E-COMMERCE
THE GLYN HUGHES INTERVIEW: SPEED, FLEXIBILITY, SURGE
GLYN HUGHES, DIRECTOR GENERAL, TIACA, TELLS ACW HOW THE E-COMMERCE REVOLUTION REDEFINES AIRFREIGHT
ACW: What proportion of global airfreight volume is currently made up of e-commerce shipments, and how is this expected to change over the next five years? GH: The interesting aspect of e-commerce and air cargo is that it is impacting all regions in a positive fashion although as a percentage of total business it does vary. Industry analysts have projected that e-commerce currently accounts for about 20% of global volumes. But of course that rises dramatically when looking at exports from Hong Kong for example. The expectation is that the current growth rate will continue for the foreseeable future so it is not unreasonable to think that double digit growth will remain for the next five years.
ACW: How is the rise of e-commerce influencing traditional airfreight
operations and the industry’s mindset toward speed, flexibility and consumer- driven demands? GH: The key difference between e-commerce and traditional general cargo is ownership. Much of the current e-commerce volume is being shipped to a customer who has already purchased the goods so there is a greater expectation expressed by that customer for predictable transport timeframes. But even with the e-commerce sector growth the industry remains focused on providing high quality solutions for the traditional verticals, particularly those that require specialised transport such as perishables, live animals, pharmaceutical and just-in-time manufacturing support.
ACW: In what ways do e-commerce-driven expectations around fast delivery affect
the prioritisation and handling of shipments within the airfreight
industry? GH: Current demand for air cargo services is placing quite a bit of stress on the system as 2024 is shaping up to be a record year. So with that backdrop its been crucial to balance all customer expectations for fast and effective delivery solutions. The role of the forwarder has been critical during these times to provide the important information to airlines and ground handlers to enable appropriate planning and asset utilisation.
ACW: What logistical challenges do e-commerce shipments introduce to
airfreight, especially in terms of warehouse processing, parcel tracking and last-mile delivery? GH: Whilst the tonnage of a general cargo shipment versus an e-commerce shipment may be similar the fundamental difference comes with customs declarations being significantly more, there is also the potential for additional de-consolidation services and of course there are multiple final mile options which vary from courier, to locker-box to mail services to self-collection. So off- airport facilities may become more important for these final stage integration processes.
ACW: Will drones have more impact on legacy airfreight operations or will they be primarily valuable for short-range e-commerce deliveries? GH: I think the area of unmanned air cargo operations presents some interesting opportunities for complex final mile, mid-volume middle-mile or even mid-volume first-mile. The exciting future will no doubt also evolve into areas we haven’t even thought of today. I see the whole area as complementary to today’s solution portfolio.
ACW: Does handling e-commerce shipments require specialised training, or can legacy airfreight personnel be upskilled to handle the unique needs of e-commerce logistics effectively? GH: All air cargo requires a common level of training to adequately address safety and security criteria. These aspects become even more important when it comes to e-commerce shipments as the number of potential shippers and mixed consignments increases. We are also seeing some specialised automation solutions being introduced in some facilities to provide integration into broader final mile distribution solutions.
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ACW: With the rapid adoption of artificial intelligence (AI) in logistics, how will AI impact the efficiency, speed and cost structure of e-commerce airfreight in the near future? GH: AI offers much promise across all aspects of supply chain logistics to analyse significant data points to support predictive logistics, and to respond to disruptions when they occur. It will enhance asset utilisation, efficiency planning and the overall customer experience. It should enhance collaboration and ultimately improve industry quality.
ACW: What security or regulatory challenges arise specifically from
e-commerce airfreight, and how can the industry address these while keeping up with high demand? GH: Safety and security compliance is crucial for all air cargo shipments, particularly when it comes to dangerous goods. For example, there are very specific regulations regarding how lithium battery shipments must be packaged, labelled and shipped, in terms of state of charge. And as e-commerce platforms facilitate smaller shippers accessing global markets there is a risk that education and training may not be at the required level in some of these smaller shippers. It’s important for state authorities and regulatory agencies to address this. Complying with advance cargo information requirements is also an area that will increase.
ACW: What innovations are emerging in packaging and cargo space utilisation driven by e-commerce, and how are airfreight carriers adapting to optimise capacity for these smaller, more frequent shipments? GH: Many e-commerce shipments are quite light so aircraft may volume out prior to max weight. We have seen packaging in recent years improving significantly versus the earlier days when e-commerce platforms used a limited number of standardised boxes. More efficient packaging facilitates a greater number of shipments being carried. We are also seeing legislation looking at packaging starting to be introduced.
ACW: How does TIACA see the role of sustainability in e-commerce airfreight, particularly in terms of emissions, packaging waste and energy use? GH: That’s a very interesting question and I think it’s the same for e-commerce as it is for general cargo, the industry is fully aware of the impact we have on the environment but also on society. So whilst we bring value to what is being transported we collectively strive to minimise the impact on the planet. We welcome legislation which looks at reducing product packaging and inserts some form of recycling mandate. We also continue to seek optimised use of ground and air space to minimise unnecessary fuel burn and of course fully utilised aircraft provide the most environmentally efficient operations. The industry also fully supports global net zero emissions target for 2050 and fully supports interim targets established. From 2025 the EU implements a minimum requirement for SAF blends in jet kerosene and the global CORSIA and EU ETS programmes ensure- that the aviation industry continues to drive forward with supporting measures to combat emissions. Investments in newer generation aircraft over the coming years will also help on the emissions front.
ACW: What partnerships or investments does the airfreight industry need to pursue to stay competitive as e-commerce continues to grow and evolve over the coming decade? GH: The airfreight industry needs to continue to collaborate with all partners across the supply chain to ensure the value proposition of safe, secure, fast, transparent and predictable services can be consistently provided. w. Equally important is enhancing relationships with customs and other border agencies to ensure cargo flows are subject to the least amount of hold ups. And to support all of these collaborative relationships the industry will need to invest in technology, to leverage the latest opportunities in data exchange and AI to address obstacles and opportunities.
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