The logistics needs of the e-commerce industry is evolving rapidly with the changing business requirements. Air cargo is riding high on e-commerce, and the industry is building infrastructure to support it. Last-mile delivery that constitutes 40-50 percent of logistics cost in India is ridden with challenges. However the logistics infrastructure being built by e-commerce companies and 3PLs has allowed 100 percent timely fulfillment of orders in India even during peak sales period.
“Today will be bad, tomorrow will be worse, but the day after tomorrow will be sunshine,” said Jack Ma of Alibaba. This quite succinctly sums up the positive growth e-commerce is delivering in terms of trade growth to the world since last year.
Air cargo industry got back its lost sheen after seven long years owing to e-commerce trade that relies heavily on express delivery. In 2017, airlines returned to freight profitability not seen since 2010. Air freight demand, measured in freight tonne kilometers (FTKs), grew by 9 percent, which was more than double the 3.6 percent annual growth recorded in 2016.
Alexandre de Juniac, director general and CEO, IATA, attributed the growth to buoyant consumer confidence, the growth of international e-commerce and the broad-based global economic upturn. It forecasts the demand growth to continue in 2018.
"We saw improvements in load factors, yields and revenues. Air cargo is still a very tough and competitive business, but the developments in 2017 were the most positive that we have seen in a very long time," said de Juniac.
As per IATA, global industry net profit is expected to rise to $38.4 billion in 2018, an improvement from the $34.5 billion expected net profit in 2017. Interestingly, cargo volumes are estimated to grow by 4.5 percent in 2018, but down from the 9.3 percent growth of 2017. Cross-border e-commerce trade is expected to continue pushing demand ahead of supply in 2018.
China that accounts for one-third of global exports is leading the growth in cross-border trade. The desire of customers for variety of products from across the globe, faster shipping and front-door delivery has put the airlines, airports and logistics service providers in full swing of operations. Add to this, the record sales during sales days like Singles day, Cyber Monday, Black Friday, Big Billion, and the ecommerce logistics potential is put to test.
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