E-commerce and air cargo, what’s next?

Cargo Facts was among the first to break news that online retailer Amazon.com was planning to launch its own-controlled air network back in December 2015. We continued to report every update as the pieces came together, and deals were forged with ATSG and Atlas Air to lease and operate a total of forty 767 freighters. According to a new report being released today by our affiliate consulting arm, Air Cargo Management Group (ACMG), the Amazon deal is only the latest evidence of a long, steady transformation of the global supply chain into a direct-to-consumer model.

The new study, “The E-Commerce Revolution Report: Reshaping the Landscape of Air Logistics,” expands upon a tremendously popular presentation delivered during this year’s Cargo Facts Symposium by ACMG senior director, Alan Hedge. The report takes a long view of e-commerce, comparing today’s cutting-edge, online distribution systems to retail operations from the last two centuries, showing how the slow, subtle improvements in the supply chain have led us to today’s high-tech express logistics system.

“E-commerce is a worldwide, yet not quite a routinely cross-border, phenomenon,” the report stated. “Although this report is entitled ‘E-commerce Revolution Report,’ the ‘revolution’ is actually the culmination of years of evolution in logistics and retail that have interacted in complex ways to (nearly) enable global, direct producer-to-consumer commerce. This report is meant to serve as an overview of e-commerce, its current effects on logistics, and possible future developments.”

ACMG – part of the Royal Media Group, which owns Cargo Facts – concentrated mostly on Amazon in the report because of its stature in markets all over the world, but its counterpart, Alibaba, along with its Cainaio platform, are also featured prominently for the Chinese market that it dominates, although it does not have its own controlled air network. There are also a number of other marketplace platforms throughout the world and there are retailers with brands strong enough to support their own electronic storefronts.

The report concludes by exhorting the logistics industry, and air cargo industry participants especially, to pay attention to the changes created by e-commerce and to be flexible and innovative in response.

Some of the important topics discussed in this report are:

• Developments in transportation, communications, and data processing have been crucial enabling technologies for e-commerce; however, without government infrastructure investment and the relaxation of government regulation, e-commerce could not exist in its current form
• The world has moved from a largely domestic producer-wholesaler-retailer-consumer logistics system to a global producer-direct-to-consumer system
• Successful brick-and-mortar retailers will have to adopt omni-channel strategies to leverage their physical presences online
• Although E-commerce is disrupting retailing and air and surface logistics, there are opportunities for the creative and agile

Now for a short video from this year’s Cargo Facts Symposium.  Hedge discusses whether the current dominance of Amazon in the e-logistics business is really a “zero-sum game,” as it is often described. Will Amazon and its new fleet of 40 leased freighters really put forwarders out of business, or are we misinterpreting the meaning of its own-controlled express network? Hedge offers some fascinating alternative hypotheses about Amazon’s potential meaning to logistics.

For more information, and to order copies of the ACMG report, please click here.

And if you missed this year’s Cargo Facts Symposium in Miami, don’t miss Cargo Facts Asia 2017 where e-commerce and the rise of own-controlled air networks will once again be in focus. We invite you to join us 25 -26 April at the Shanghai Grand Hyatt. To register, or for more information, go to CargoFactsAsia.com.