How the pandemic is changing e-Commerce

Air Cargo
” was the title of a recent IATA webinar on 15OCT20, moderated by Brendan Sullivan, Head of Cargo Operations & eCommerce at IATA, and featuring guest speakers Maciej Starzyk,
Senior Manager Strategy at PwC, Sebastian Blümmert, Head of Operations & IT at heyworld, and Dr. Ludwig Hausmann, Partner at McKinsey and Co. Its focus: the challenges, opportunities, and
dynamics of e-Commerce in the pandemic situation.

Rapidly rising numbers was already a phenomenon in e-Commerce well before COVID-19 hit the headlines. According to Maciej Starzyk, with an average CAGR in revenues of over 20% since 2015, this
meant that it had almost doubled between 2015 and 2019. Though the majority is domestic business, cross-border e-Commerce has been increasing, too, from a 7% share to 11% in total revenues along
the same time period. Around 80% of cross-border e-Commerce cargo is flown. Yet, globally, we are still very much at the start of the true e-Commerce boom, given that emerging markets were on the
brink of contributing to growth at the end of last year.

And then COVID-19 hit…
e-Commerce has moved 10 years ahead in just 90 days” was the title of one of Dr. Ludwig Hausmann’s slide, illustrating the huge jump from 15% to 35% e-Commerce penetration in the U.S.
following its lock-down in the first quarter. An image that was reflected in a number of other countries, too. He cited up to 200% year-on-year increases in weekly online purchases in the UK,
Spain, and Italy during that time. The largest growths are seen in orders of medicines, household supplies and food deliveries.
With the closing of borders, the slump in available air cargo capacity, and the move to more regular, local supplies, 2020 could see a reversal of the trend of the past five years, namely that
for the first time domestic e-Commerce growth will largely outstrip cross-border growth.

Might as well call it “air-Commerce”! Image: Excerpt of PwC/IATA Webinar presentation
Might as well call it “air-Commerce”! Image: Excerpt of PwC/IATA Webinar presentation


Reliability versus speed
The pandemic created a huge upheaval in air cargo logistics. On the one hand, passenger bellies disappeared practically overnight, leading to a massive shortage in air cargo capacities, on the
other, PPE – often flying as e-Commerce – consumed what little space remained. Rates went through the roof; flight schedules became erratic, planning close to impossible.
At the same time, with “normal life” turned upside down for most people, the expectation that what is ordered online has to be delivered within a very short time frame, also changed. There
appears to be a greater acceptance of longer timeframes, with a shift to reliability as opposed to speed in many cases, and a seemingly greater trust in domestic suppliers.
On the other hand, the hike in rates coupled with scarce air cargo capacity, has also prompted some cross-border shippers to “explore alternative transport modes (e.g. expedited LCL, rail
”, Dr. Hausmann stated.
A new appreciation for logistics
The current situation has created what I would like to call a new appreciation for logistics,” said Sebastian Blümmert, who sees trends appearing that he believes will remain,
post-pandemic: namely greater diversification in services related to delivery speeds, as well as a move away from single-sourcing when it comes to logistics providers, and an intensified interest
in supply chain transparency. This is now the time for logistics providers to show and prove their reliability, and this in turn will improve rate levels as customers focus more on quality and
value as opposed to the previous trend towards as fast and cheap as possible.

The importance of data…
The time to use data is now,” he went on to say, highlighting that “data is a powerful tool to cope in challenging times” both when it comes to forecasting, and in anticipating
and managing irregularities. The desire to share information is greater on the side of the shippers than on that of the logistics providers, but every small move to more seamless data
transparency can yield much better results, already. “Higher levels of digitalization across the value chain, allowing the integration of track & trace services,” was also a key
requirement put forward both by Maciej Starzyk and Dr. Hausmann, in an effort to fill the current gaps that exist at various points of the supply chain (diverse labelling, customs clearance,
end-to-end visibility, capacity status, to name but a few), as well as the growing need for clear processes when it comes to returns (reverse logistics) and customer complaint and feedback
management. There are still a number of pain points along the end-to-end supply chain which, in the traditional air freight world, has been kept largely fragmented: a very different picture to
integrators and emerging all-in-one service providers such as Amazon and Cainiao/AliBaba.

Last, but not least, enforced social distancing has and continues to play its role in driving digitalization, contactless and automation forward. Over time, these improvements may steer the focus
back to delivery speed once more.

Brigitte Gledhill


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Source: Cargoforwarder

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