Air cargo transformation is taking off due to e-commerce

Dr. Michael Hanke, founder and managing director of SkaiBlu, an e-commerce consultancy assisting clients in the aviation industry, tells Logistics Management that ecommerce has transformed the air cargo business from being supply chain focused to be much more “customer centric.”

He says that from a customer’s perspective, with e-commerce, “convenience”, “control”, and “cost” (the so-called three “Cs”) assume a crucial role: Today, customers determine the hours of operation (they log on whenever they want, thus a company always has to be “on”), customers increasingly want to serve themselves (think of a retailer checking the status of their shipments via e-tracking or reserving shipping space through an air cargo business website ), and companies’ e-commerce services need to be delivered at the customer’s location (be it an office desktop, a mobile device, or wearable computing).

Hanke, author of "Airline E-commerce: Log on.Take off," notes that at the same time, e-commerce has made market places more transparent (and thus more competitive).

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

Hanke says another impact of e-commerce is improved efficiency of business processes (“think of the e-airway bill or the application of e-commerce software to help track/analyze the levels of inventory at suppliers and manufacturers in real-time for more effective JIT”). 

Lastly, the change in market structures as a result of e-commerce should also be highlighted.

The arrival of the internet and internet-based technology has forced many participants in the airline cargo business to redesign the relationship with their target audience. In this regard, relevant to mention are:

• disintermediation or cutting out the middle men (business customers directly interacting with airline cargo websites for shipment bookings/tracking/paper work and bypassing traditional intermediaries such as air freight forwarders).
• re-intermediation or entering partnerships with new cyberspace-based entities (think of small and medium-sized exporters in China now working with Maersk Shipping via Alibaba’s e-freight platform OneTouch for logistics and customs clearance, another example is the relationship between Walmart and Uber as well Lyft started in summer 2016 for the delivery of groceries and other merchandise   ), and
• counter-mediation where a company sets up a new intermediary largely/exclusively under its control (see Amazon Prime Air with Amazon air cargo operations planned to start this April and expected to grow to 40 B767-3000 aircraft as well as drone-based deliveries  already commenced as a beta test in the UK in December, AmazonFlex for contracting private drivers to do “last mile” deliveries)  

“Drivers of these initiatives include cost savings, larger control over supply chain, and higher brand profile,” he concludes.