CFC’s Horst on e-commerce-driven EU airport peak

Several EU airports saw peak season volumes that surpassed 2019 levels because of increased intra-European traffic from higher express activity and the expansion of Amazon’s dedicated network, according to Cargo Facts Consulting. In this Industry Pulse webinar, Cargo Facts Consulting Managing Director Frederic Horst looks at recent retail and e-commerce trends across Europ e and how, to a certain extent, this demand driver is reflected in airport throughput. Horst discusses how e-commerce sales for the twenty-seven EU member states rose 25% in 2020 compared to 2019, contributing to a strong year-end cargo peak at many airports across the region. Cologne (CGN) is one such hub, utilized by express carriers including UPS, FedEx and DHL, as well as Amazon. The airport’s December cargo throughput increased from 70,000 tonnes in 2019, to 85,000 tonnes in 2020, according to Horst. “There’s a lot of Amazon traffic,” said Horst, who estimated Amazon’s contribution to be over 20,000 tonnes. “That's a big increase in a year where a lot of passenger capacity is missing.” Subscribers can access the European E-commerce and Express Trends slides here . A transcript is available below. This transcript has been generated by software and is being presented as is. Some transcription errors may remain. Charles Kauffman As we near the end of February 2021, we are starting to see a more comprehensive picture of 2020, in terms of the data that is available. Frederic, I know much of your research over the past few weeks has really taken a deep dive into some of this data. Hopefully, we can take a look at the European picture in a bit more detail. Frederic Horst Yeah, I mean, generally, we tend to focus on the US but there's a lot been happening in the European market. And a lot of the trends that we've seen quite similar as well in terms of terms of ecommerce in terms of Express, and so on. So today, I wanted to focus a bit on the kind of things that we were seeing in 2020. In in the e commerce market overall, and how that's to an extent, also reflected in some of the airport traffic that we're seeing and some of the Express flying e commerce dedicated East commerce planning as well, because Amazon, as you probably know, has also in the meantime developed quite an extensive European network in Europe, it's not just limited to the US in terms of terms of what they're doing. So they're leading, leading some growth there as well. Um, so the overall picture was in 2020, very similar to the US. We saw 25% growth in business, consumer retail sales, and January 2021. Numbers not really out except for Denmark. I saw in the US ecommerce was up about 20 to 23%. year on year I'm expecting a similar picture in Europe. This follows a number of years where we've really seen ecommerce growth consistently outpaced the growth of traditional retail. So in 2019, ecommerce grew 10% while the overall retail market grew 3% in 2018, it was 7% versus 3% 2020 was very much a mixed bag. There were some sectors because of because of large scale lockdowns and business businesses being shot that face some pretty big declines and other areas that saw quite some growth. So clothing and footwear and traditional clothing and footwear stores was down 24% across the across the EU, food and beverages were up 5.4% similar trend in the US you weren't going out to eat, you're buying more food to cook at home, you're buying more booze to drink at home as well, within your big differences, as well. German retail overall, which includes everything. To car sales grew by 5%, while in France declined by 1%, Spain and Italy each were down by about 5.5% in 2020. What we did see in in Europe, and this is based on a survey that USA does every year is that the number of people shopping online increased. So at the time the survey was conducted in 2020 53% of respondents said they had purchased online over the preceding three months. And this this chart here shows the development between 2007 and 2020. And we see a gradual increase of the level of the level of activity online shopping activity. There's big differences across countries, UK which is not included in this overall average and not including the EU but in the UK. This number would be highly 3% 83% of respondents individuals said they had shopped online over the last three months. Denmark is pretty similar. Romania at the other end is only about 22%. And what we also saw in in 2020. And that's partially due to lack of physical retail alternatives but also a continuation of a trend that we're seeing over and number of years, we saw customers making more those who purchased online, we saw them making more purchases. And the number of customers who within the preceding three months of the survey had made six or more purchases online grew from 13% in 2019, to 16%. In 2020. The number of customers making 10 or more purchases didn't grow quite as big it grew from six to 7% of respondents. And this is across the, again, there's differences between individual countries. But overall, this is the trend that we're, we've been seeing. And there was also a big jump in the amount that people spent. So we saw a decline in the categories of sort of between zero and 100 euros, where were the number of EU residents who actually purchased within this category went down, but we saw a big increase in the category of 100 euros and more. So if we look at 2019, for example, 28% of EU residents said they had purchased stuff online, for 100 euros or more, in 2020, it was 37% of that purchase that and the biggest, excuse me, the biggest increase was really in this category between 105 100 euros. So it's not like people were spending 1000s of euros online. But this 100-500 euro category increased quite substantially. Um, I guess a lot of is not surprising. I mean, anecdotally, this is this is what we've been feeling in terms of what has been happening in the market. But this this data really underlines the extent to which this is this is happening. And I want to switch a little bit to something else and to talk a bit about airport traffic in Europe because there's obviously a direct linkage between or at least to an extent a linkage between the two Express networks in your across the world became much more dependent on business to consumer traffic. And Express networks or a surge of business to consumer traffic study parcel networks and other networks is happening in trial regional or domestic networks, but it helps I have no intercontinental. So it'll be quite interesting to see how this has actually affected growth and different airports and we've got a very, very rich data set that we've put together in a in a in a dashboard. Let me expand that. There's filters in there, and expand that a bit. So you can consider it better. And if you want, we can just jump into individual airports and just have a look and, and discuss what we've seen that. Charles Kauffman Could we start with country like Germany is the data pretty comprehensive? Frederic Horst Germany this data through to the end of the year. So, the, the chart that you really want to be looking at is the one in the bottom left hand corner, which at the moment is showing total frayed, loaded and unloaded at this at this particular airport. So let's click on Germany so overall monthly traffic we see a decline in the in the middle of the year in terms of particularly around April, May when we're in the first lockdown and a pickup in traffic after that. Biggest airports in terms of in terms of in terms of tonnage traffic in Germany are a bit generally given Franco puts in the greatest level of tonnage. But then we've obviously got Express AirPort Express focus airports like cologne or Leipzig in there as well so um maybe let's jump into let's jump into Cologne, which is a hub that serves three major integrated operators, FedEx with a big international hub, DHL and ups with big your intra European hub. And there's a lot of Amazon traffic there as well as there's probably about 20 25,000 tons of Amazon traffic that moved through the airport last year. So there we really see a picture that when we start to get into some of these other airports that that's quite consistent there that the peak in 2020 was much higher than what it was in previous years. So in December 2020. We saw about 85,000 tonnes go through the airport. If we continue About to 2019 this was about 70,000 tonnes. So from 70,000 tonnes to 85,000 tonnes. that's a that's a big increase in a year where a lot of passenger capacity is missing. Charles Kauffman And so that is that is total throughput for the year right. Can we can we break that down further and look at Long Haul versus intra Europe? Frederic Horst Yeah, we can. So if we look at, if we look at entry European traffic only, so I'll take within the EU 27. So that's everything except for, for the UK. And this is really the picture that we do, we seen, we've seen a spike there as well, this is right now what you're seeing there is tonnage. If we look at this in terms of frightened male movements, you'll also see a big spike in there. And, and it's not shown in this data set, but part of the spike is actually been due to more 737 type flying, so that's extra Express feeder stuff, but also the extra traffic that Amazon has been putting there. Through the through the airport. If we look at Leipzig, for example, Leipzig, you'll see a similar picture citizens This is everything in my ticket the moment freight and mail unloaded. If we if we just look at if we just look at this is it just This is Justin Trudeau you. And if we look at total traffic, it's a fairly similar picture. So it's pretty consistent, we've seen both intercontinental traffic increase, as well as intra European traffic increase. And we've also seen a number of cargo movements increase in in these in these locations. And traditional airport traditional sort of combination carrier hubs like Frankfurt, there, the picture is slightly different. And you don't really see this spike year over year. But you do see an increase in extra traffic and a lot of that is is his normal cargo traffic and in Frankfurt is always a very big have been a very big cargo have up but also extra passenger freighter activity that's been going I mean, for most of the last the last quarter of last year, we you'd have depending on the line where it was Trans Europe, Asia, or, or transatlantic, anywhere between sort of 150 and 200 passenger freighter flights that came in, per week on that line. And most of those were going into the pub. Charles Kauffman Okay, how about some of the more traditional, all-cargo, freighter focused hubs in Europe, maybe Luxembourg, or Liege? Frederic Horst Let's, let's jump to let us jump to Luxembourg, I need to zoom in here. small country. Alright, so this is this is Luxembourg. And I don't need to click on the airport because there's only one. And here you see that what you're seeing here in the data and goes back, in this case to 2014. But we'll just look at it from 2017 onwards, you see the traditional drop in February around Chinese New Year. Normally in terms of the pattern, you see a bit of a bit of a spike towards the end of the after Chinese New Year and towards the end of the financial year for a lot of Asian countries, then you see a bit of a summer lull. And then you see a peak season pick up where in October, November and December, you tend to see a peaking, peaking traffic due to the pre Christmas due to the pre Christmas peak. And that's pretty similar. You know, if you're looking at Hong Kong, it's the same if you look in Shanghai, it's the same that that won't vary all that much by airport and even by Express airport, you see similar types of pictures also, although you see more traffic towards the end of towards the end of November and ended early, early December than the general freight traffic. What we saw here in in in 2020 is that the peak season was much higher than anything before and part of that was just all cargo flights, extra utilization, but a lot of it was passenger freighter flights. So Qatar Airways has been off now. I see them flying past my office all the time. And Qatar Airways has been offering a lot of passenger freighter flights into Luxembourg and seven eight sevens or triple sevens for a job Frederic Horst We can look at the difference later the numbers for Belgium are current through two through two no November so December is not in there. If we look at just leash pacifically, also huge increase in cargo volumes, you know, traditionally leverage was, was doing somewhere between 50,070 1000 tons a month, in November, it was 111,000 tons that went through the airport. That's all stuff. If we look at international, if we look at sort of intra EU traffic, and there wasn't such a big increase from there, if we look at traffic outside the EU, there was quite a big increase in that. So we've seen a lot of freighter capacity, particularly ecommerce type stuff that's been that's been going into layers is obviously going to change over time. And the movement wise layers is very, very dependent on on FedEx is traffic and the announcement they made earlier in the year, we're gonna fight, at least 40% of the staff in the US is definitely going to hurt traffic for that, to that airport. And that's, that's, that's leash that's in tons, cargo movements, similar kind of picture. And although the increases not quite as not quite as big, I mean, you have to realize a big chunk of the cargo movements in layers are actually related to narrow body flow. And that didn't increase to the same extent. If we look at Brussels, we'll probably see a bit of a different, a different picture. So Brussels, and they I'm not sure what this peak was whether that's just an anomaly in October 2019. But that was an anomaly in the data or not. And, but what we've seen with Brussels is really traveled traffic hasn't picked up to the same extent and, and we would see a similar picture. If we looked at, if we looked at London Heathrow, for example. In terms of in terms of frayed, loaded and unloaded Let me read this essay we're seeing we're still at a much lower level than we were in in previous years. Whereas if we went to Stansted, which is a freighter focused airport, and the picture is very, very much different to what it is to what is there. Frederic Horst It does underline some of the things that we've that we've been expecting. What we'll see, for example, though, in in, in places like London, Heathrow, is you'll see an increase in the number of all cargo movements. Now he first traditionally never afraid to airport. And because most of the freighter operations that have been moved to Stansted, there's a few sort of legacy freight operations that are left in effect, but generally, the traffic distribution rules in place, tries to push the freight operations out of that. But what we've seen throughout 2020, particularly starting in in in April, is an increase in second freight operations. But what we're seeing here in the day are really passenger freight operations. So they're going through primarily passenger freight operations that are going through for ether. Charles Kauffman And for this UK traffic, how, how up to date, is it Are we starting to see some of the impacts from Brexit or I mean, it, much of what we reported on for particle effects really is indicated that much of the uptick in in charter activity was really not surfacing until late January or early even mid February. Frederic Horst Yeah, I mean, I mean, we've seen it, we've seen an uptick, because of because of the mean, how many times have we had Brexit? Right, but because of the the actual the actual end of the transition period. And capacity was very tight, because we had truck drivers that were that were that were stuck in Dover and couldn't get across to France. And then there was the whole the whole problems with put drivers go, do they need to get tested or not? And so on. So it was a big mess. There was a huge demand for extra air cargo capacity. We'll probably see that in the numbers. We wouldn't see this in the numbers here yet. What we're really seeing is, is just extra Express traffic, due to business to consumer demand and extra traffic, freight and traffic in those freighter airports as a consequence of there being such a lack of passenger. Such a lack of passenger demand. It's rather interesting to dig into that on this Yeah, when we when we have individuals that come to us, then then this is something we're happy to spend some time on looking as well. Charles Kauffman So it's certainly a mix. Okay. Well, Frederic, once again, thank you for joining us this afternoon. Always a pleasure.T hank you.And for subscribers who may be interested in, you know, digging around and looking at this data a bit more closely. What is what is currently available on on CFC insights? Frederic Horst Yeah, so within the within the analysis pieces that we do, we often embed some of this, this data in individual analysis basis that we do and we've got some interactive tools in, in there as as long as we're adding stuff all the time as we as we develop these dashboards as well. Cargo Facts Asia, taking place April 20-21 as a virtual experience, is the event for exploring opportunity in the Asia-Pacific region. The event continues to bring together the best, brightest, and most innovative executives in the global air cargo industry. Learn more and register at www.cargofactsasia.com .

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