E-commerce is driving the growth of airfreight, even as e-commerce cargo is seen as riskier than other kinds of cargo, according to a blog post from Panalpina.
The forwarding and logistics service provider noted how the airfreight peak season is in full swing—and about to get even busier—as big e-commerce dates are all happening in November, starting with Singles’ Day on November 11, followed by Black Friday on November 23, and Black Monday on November 26.
While Cyber Monday and Black Friday are traditionally U.S. events, and Singles’ Day is thought of as a Chinese occasion, “you can see these growing into global shopping (and shipping) events, with the air freight volumes to prove it,” said Panalpina.
E-commerce is the fastest growing sector driving global airfreight volumes. Lucas Kuehner, Panalpina’s global head of airfreight, earlier noted: “We have gone from zero to an estimated 20,000 tons [of e-commerce air freight] in only two years. The actual figure is likely to be higher.”
Big online marketplaces and their suppliers comprise the most important e-commerce customers of freight forwarders. This market is getting bigger as traditional stores are also increasingly turning to e-commerce, and to airfreight, even as smaller e-commerce customers are also “interesting” for forwarders like Panalpina in their classic role as consolidators.
“When doing e-commerce air freight you have to know exactly what you’re doing and deliver with speed and consistency. That includes staying on top of customs as well as dangerous goods and security regulations, because nothing can go wrong,” said Kuehner.
Unhindered by national borders, legions of consumers will go online this month to purchase products online. After the final, effortless click, their international orders will be consolidated, transported and de-consolidated—often multiple times.
“Only freight consolidation can make international e-commerce shipments affordable in the first place. Otherwise, transport costs, especially for air freight, would be too high and often in no relation to the price of the purchased product,” explained Kuehner.
“But the consolidation comes with challenges. In many cases, the original shipper details and the product information get diluted by a single commodity list provided under the name of the consolidator, who deals directly with a freight forwarder such as Panalpina. That makes e-commerce cargo riskier than other cargo.”
Freight forwarders, airlines, regulators and authorities are faced with three main challenges:
· Firstly, third-party screening for compliance and security becomes difficult since the original shipper details are not transparent at the time of shipment booking.
· Secondly, counterfeit and other forbidden illegal items can lead to delays and customs penalties for the shippers.
· Thirdly, hidden, falsely declared or undeclared dangerous goods can jeopardize flight safety and the environment.
These challenges need to be addressed because e-commerce is here to stay, said Panalpina. It is estimated that there are currently over one billion online buyers in the world, and online shopping transactions continue to evolve rapidly as global e-commerce retail sales are expected to exceed US$4.8 trillion by 2021.
For the 10th edition of Singles’ Day on November 11 alone, Alibaba expects to receive more than one billion orders.
The majority of these orders will come from within China, said the blog post. “However, with Alibaba’s significant and growing presence in international markets across Asia, Europe and Latin America, scores of products will have to be shipped to consumers the world over too.”
Panalpina said it has put in place global standard operating procedures for e-commerce freight to ensure a safe and seamless process from booking acceptance to handover to the carriers. Such measures are necessary to mitigate risk in international supply chains that are inherent to the global boom of e-commerce, it said.
Photo: Senado Federal
