Air transport needs right logistics solution to ride e-commerce wave
December 05 2018 10:29 PM
More than 320bn
More than 320bn letters and 7bn parcels are sent across the globe every year and airmail plays a key role in their delivery

The emergence of electronic communication channels has led to a dramatic drop in the number of letters sent, but more and more parcels are now being delivered every day, thanks to e-commerce.
More than 320bn letters and 7bn parcels are sent across the globe every year and airmail plays a key role in their delivery.
Postal services around the world, therefore, are considering potential future product and service enhancements to supplement or replace declining letter-post volumes, airmail in particular, according to the Universal Postal Union (UPU). 
Some postal operators are finding that existing infrastructure, customer relationships, and supply chain expertise can be optimised, for example, in offering products, services, solutions related to letter post or parcel post. 
Some others are contemplating areas that would be unrelated to the core business, but that might complement or increase their offerings.
Obviously, increasing global trade is pushing postal services to listen closely to customers and work hand in hand with consumers and merchants to ride the e-commerce wave. The story of airmail actually began on May 15, 1918, when the world’s first regularly scheduled airmail route was inaugurated under US government auspices between New York and Washington, DC with a stop at Philadelphia. 
The distance of the route was 218 miles, and one round trip per day was made, six days a week. 
Since then, postal providers around the world have counted on the airline industry to provide fast and reliable services for their mail products.
The emergence and popularity of electronic delivery channels are now challenging the postal system in general. 
Globally, airmail volumes have been declining as the world economy increasingly turns to e-commerce: whether for online shopping between consumers and businesses, from consumer to consumer, or business to business. By 2020, some 940mn online shoppers are expected to spend almost $1tn on cross-border e-commerce transactions. Online business-to-consumer sales are expected to hit $2tn by 2020, according to an estimate. 
Initial UPU data tracking global postal exchanges indicates promising growth along corridors in North and South America, Europe and Asia for cross-border e-commerce.
But to maintain the same pace of growth in the Arab world and in Africa, stakeholders must work to hop on the economic bandwagon.
Traditional and digital worlds are also closely integrated with omni-channel solutions and business models mixing offline, online and even virtual experiences.
Since 2005, global internet retail sales have grown above 20% a year on average according to Euromonitor International, much faster than traditional store-based sales. 
In addition to rising domestic volumes sent by large and small e-retailers, the fast-growing cross-border e-commerce market remains a key growth driver. 
International Post Corporation (IPC) reported in its annual survey that between 2013 and 2015, e-commerce from Asia Pacific to Europe grew by 66%. The global value of e-commerce sales forecast for 2019 is expected to reach $3.5tn.
Despite these impressive figures, online retail is still relatively immature as it accounts for only 8.7% of total retail sales, according to ‘eMarketer’. Those figures show the huge potential of e-commerce in the near future. 
Nonetheless, e-commerce is a future growth driver for the air cargo industry, as online shopping boosts demand for parcel delivery services worldwide. 
On aggregation, the industry’s parcel volume more than doubled over the last decade, growing at a rate far above economic growth, points out the International Air Transport Association (IATA).
Online shoppers are now buying more and more often and cross-border e-commerce volumes are growing. In March 2017, the majority of the online shoppers in China, the US, Germany and United Kingdom buy online at least once every two weeks, IPC noted.
The global scale of the Internet means that online retailing can reach more prospective customers than the brick and mortar based competitors. 
To deliver to their customers, e-commerce players can choose a variety of logistics options including surface transport (such as road, rail, and sea) and air transport. 
But when it comes to delivering goods globally with speed, greater efficiency and reliability, air transport is clearly well-positioned to serve the market needs. 
But to do that the air transport industry must be ready to offer the right logistics solutions for the e-commerce retail segment, supporting their business growth.

Pratap John is Business Editor and Chief Business Reporter at Gulf Times.

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