The China-Russia connection: E-commerce demand supports a booming trade lane

Chinese express carriers have been making waves in the air cargo business for some time now, rapidly building up their freighter operations and innovating domestic express operations. Still, despite being the base for two of the world’s largest e-commerce companies – JD.com, which is often compared to Amazon for the high degree of control it exerts over its e-commerce platform, and Alibaba, which, like eBay, provides a platform for third-party sellers to reach customers across the world – a large number of carriers from multiple countries are providing cross-border lift for e-commerce parcels departing the Asia-Pacific region.

As the largest e-commerce companies turn to third-party partnerships for cross-border logistics, Russia-based carriers, investment funds, airports and other entities are stepping up to promote growing domestic e-commerce business and to enable Chinese e-commerce trade into Europe and beyond. Air Cargo World spoke with carriers and airports working with China to promote the expansion of new trade lanes through Russia’s Moscow Airport (SVO) and on to the rest of the world about how this strengthening relationship fortifies global e-commerce trade, even as airfreight struggles amid protectionist sentiment.

Russian retail goes e-tail

Although not the birthplace of the major e-commerce companies the United States and China boast, Russian demand for e-commerce accessibility has nevertheless grown rapidly over the past several years. Volga-Dnepr Group, the parent company of scheduled carriers AirBridgeCargo (ABC) and Atran Airlines, said Russia’s domestic and cross-border e-commerce sectors are set to double by 2024, thanks to several changes in the country including:

• Better internet access with wider coverage across the region and a new generation of tech-savvy internet users;
• Growing e-tail companies overseas and rapid expansion of Russian e-tailers;
• Investment in regional distribution centers; and
• Creation of new marketplaces in cooperation with investment funds and major e-commerce companies.

Russian carriers have moved quickly to accommodate the increased demand. ABC’s General Director, Nikolay Glushnev, said the airline “has been developing its dedicated ‘abc e-com’ product to accommodate growing demand of e-commerce shipments, creating airfreight solutions, synchronizing API, strengthening its team of specialists and cooperating with reliable supply chain partners.” The carrier also worked with its parent company’s engineering division, Volga-Dnepr Engineering and Logistic Center (ELC), to create specialized stabilizing racks to accommodate the troublesome “light but volumetric” cargo that carriers say can be an obstacle in making e-commerce shipments profitable.

According to Glushnev, ABC’s focus on e-commerce “resulted in more than 60% uptick in volumes for the first eight months of 2019, which amounted to 25,000 tones.” The airline sees high demand (about 45% of its volumes) on the China-Europe trade lane, Glushnev said, with the remaining 55% seen between China, the U.S. and Russia. Meanwhile, Atran, the express carrier within Volga-Dnepr Group, also saw an uptick in its cargo traffic “with a major part of the shipments being e-commerce related,” Dmitry Obsharov, Atran’s general director, told Air Cargo World. The carrier saw a “more than 40% upsurge” totaling over 10,000 tonnes, primarily due to domestic cargo.