AIR CARG O WEEK


E-COMMERCE


SUPPLEMENT


‘RETURN TO SENDER’ MATTERS TO E-COMMERCE


THERE ARE MANY OUTSIDE OF AIRFREIGHT WHO MAY NOT APPRECIATE THERE IS A HIDDEN STREAM OF BUSINESS THAT SUPPORTS THOSE WHO WANT TO RETURN THEIR E-COMMERCE PURCHASES.


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“The decision to return an e-commerce purchase allows income to be generated both in exporting and importing the same package.”


-commerce return shipments matter to airfreight. They are not the largest single product category by weight, but they are a rapidly growing, high-value, time-sensitive and margin- sensitive flow that disproportionately touches air networks for cross-border moves.


Global e-commerce returns are a multi-hundred-billion-dollar problem.


Industry reporting places merchandise returned in recent years at roughly $743 bn (the US figure often used as a proxy for scale in industry reports), and e-commerce return rates are often cited in the mid-teens (online average 17% in several studies). That scale translates into very large parcel volumes and significant reverse logistics demand across transport modes. For airfreight the decision to return an e-commerce purchase allows


income to be generated both in exporting and importing the same package, avoiding the imbalance of full and empty cargo holds on aircraft. Airfreight’s role is concentrated in cross-border e-commerce. IATA and


other air-cargo analyses estimate that 80% of cross-border e-commerce flows in both directions travel by air because of delivery speed, parcel segmentation and customer expectations, particularly for electronics, fashion premium brands and fast-replacement warranty parts. That means a disproportionate share of the value of cross-border returns - and many of the highest-value or time-sensitive returns - will route on air networks.


Unit economics: cost per return Retail and reverse-logistics studies commonly put the average cost to handle a return (shipping + processing + inspection + customer service + refurbishment/markdowns) at about $25–$30 per return; for items where inspection/refurbishment is material the effective cost can rise to 20–39% of the item price. For cross-border reverse moves, air’s per-kg rates are much higher than ocean or consolidated road, so returning low- value goods by air is often uneconomic - but companies do it for speed, customer satisfaction or because the returns originate/terminate in markets where air is the dominant parcel solution. Principal risks to return shipments include the direct cost pressure


to retailers and carriers. At $25–$30 per return and with global return volumes in the hundreds of billions of dollars, reverse logistics is a material P&L (Profit and Loss) line. Carriers such as DHL, UPS, FedEx capture per-shipment revenue but also face peak-season volatility; retailers (Amazon, ASOS, Zalando, H&M, Boohoo, Uniqlo) absorb handling, restock and markdown costs when goods cannot be resold at full price. Spot air


rates and capacity tightness (peak season, belly-freight


swings) can spike costs for returns. Where retailers have historically flown warranty replacements or premium returns, a rate spike can quickly convert a marginal flow into a loss-making one. IATA and air cargo commentators highlight this concentration in cross-border e-commerce. Cross-border


returns are exposed to customs classification errors,


duty repayment complexity and friction that delay refunds or increase handling costs - increasing days in transit and the chance that a product


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must be discounted or written off on return. A significant share of returned goods are downgraded, refurbished,


sold in secondary channels or scrapped. Industry reporting shows large proportions of returned apparel and electronics do not return to original margin - a material loss after transport and handling. Retailers and reverse-logistics platforms report


rising instances of


abuse: a small share of shoppers account for a large share of returns, which increases average cost per return and complicates unit economics.


What happens if free returns are stopped? Return volumes will fall - but not disappear. Surveys and retailer reports show that charging for returns, or narrowing return windows, reduces return rates for many merchants (reports indicate more than half of surveyed retailers saw reductions). Consumers respond by being more selective, using free collection points or choosing retailers with generous policies. The effect is uneven by category: high-consideration categories (fashion) show the largest elasticity. Modal shift and consolidation away from air for low-value returns. If


consumers bear return costs, they tend to choose slower, cheaper return routes (store drop-off, consolidated ground/sea returns to regional hubs). That will reduce lower-value, time-insensitive reverse flows on air, shrinking volume but improving unit economics for carriers who retain high-value/time-sensitive returns such as warranty electronics replacements. Expect carriers like DHL, UPS and FedEx to see a decline in parcel reverse air volume but to maintain profitable high-yield returns. Companies that have already experimented with charging for returns (ASOS,


H&M and others in Europe have trialled fees or store-only returns) report lower return rates but risked press and customer churn. Data and consumer surveys suggest substantial backlash potential, especially among younger cohorts who over-order to try items; some studies indicate a majority of shoppers value free returns highly and may switch retailers if fees are introduced. Platforms such as Optoro, Crysell and third-party returns specialists


see demand for solutions that increase recovery value (better disposition, resale channels, refurbishment). If free returns fall, retailers will invest more in front-end fit/visualization (to reduce returns) and back-end recovery tech (to recapture value). .


Practical business implications Air-cargo stakeholders should segment reverse logistics by SKU value and lane: premium electronics, spare parts, and time-critical warranty items will largely remain air-borne, while fashion and low-value goods are most sensitive to return-policy changes. Retailers should quantify per- SKU return costs to calibrate pricing, convenience, and consolidation levers. Carriers and 3PLs can differentiate with bundled reverse services—fast lanes for high-value items and consolidated options for low-value flows. As “free” returns recede, volumes will decline and more low-value returns will shift off air.


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