E-commerce Drives Changes in Air Freight Market

The ongoing expansion of e-commerce is not only redefining the retail landscape, but the air freight market that supports it, as well.

The ongoing expansion of e-commerce is not only redefining the retail landscape, but the air freight market that supports it, as well.

According to Forrester, e-commerce will continue to enjoy strong growth in the coming years, with U.S. online retail sales increasing from $373 billion in 2016 to more than $520 billion in 2020. Much of this growth will be generated by retailers like Amazon that understand the unique draws of e-commerce for the average consumer.

In addition to fair pricing, today’s consumers place a high premium on convenience, with many willing to pay for a more expensive product in exchange for a shorter fulfillment timeline. This consumer preference has already been borne out in the marketplace, as retailers and manufacturers that offer expedited shipping have grown 1.6 times faster on average than their competitors.

This prioritization of convenience has helped drive a resurgence of global air freight markets, with the first half of 2017 seeing the most rapid expansion of air freight since 2010. Indeed, as of earlier this year, e-commerce shipments accounted for nearly 20% of all global air cargo volume, confirming the substantial power of e-commerce over the global air freight market.

Making Air Freight More User-Friendly

With such a significant segment of their business dependent on e-commerce, air freight carriers have had little choice but to optimize their operations for a digital marketplace. According to e-commerce consultant Dr. Michael Hanke, this has forced shipping companies to concentrate less on the minutiae of the supply chain and more on the consumer.

“Customers have never had access to more information than today,” Dr. Hanke points out, “and with the next best website only one mouse click away, suppliers in the air cargo value chain need to be more mindful than ever of their price levels and quality of service.”

This is especially true in light of the fact that, generally speaking, air freight remains considerably more expensive than ocean freight. While some of this additional cost is passed on to the end consumer, retailers and manufacturers still need reliable and cost-effective air freight services in order to minimize their own financial risk.

Adapting to New Demands

More often than not, the most successful air freight companies have quickly adapted to the ship-it-now demands of modern consumers by increased operational agility and flexibility. Many of these adjustments have come on the operational management side of the equation – more efficient multi-vendor order consolidation, expanded inland transport pickup and delivery services, more effective customs brokerage, and so on – but many air freight companies have chosen to update their actual fleets, as well.

According to ACMG’s 2017 Freighter Forecast, the number of narrow-body air freighters in service worldwide will increase from 656 at the end of 2016 to 1,178 in 2036, at which point narrow-body freighters will account for nearly 45% of all cargo planes in service. These smaller aircraft enable air freight companies to compress their delivery timelines by reducing the volume of cargo needed to constitute a full load, among other things. If a retailer needs a modest order shipped at a moment’s notice, they can contract the services of a narrow-body freighter without having to worry about wasting costly cargo space or waiting for multi-vendor consolidation, making a narrow-body fleet the perfect solution for the challenges presented by always-on, convenience-first e-commerce.

Finding Value

While e-commerce giants like Amazon may have the resources to build their own air freight operations from the ground up, the vast majority of e-commerce retailers rely on air freight forwarders — also known as indirect air carriers (IAC) — to fulfill their air shipping needs.

An ideal IAC has extensive experience with a variety of operational services and is well-versed in local and international regulations governing air transportation. What matters most, though, is that an IAC has a demonstrated track record of delivering shipments on-time and undamaged.

At Primary Freight, we’ve spent nearly two decades learning everything there is to know about air freight, and have developed a great deal of expertise in agile, e-commerce-optimized operations. Our comprehensive assortment of air freight services ensures that your cargo is delivered securely, on-time, and in the most cost-effective way possible.

If you’re interested in learning more about our air freight services and our award-winning customer service, give us a call at (800) 635-0013 today.