Consultant Insight: Partnerships are good but action is better for success in e-commerce logistics

[caption id="attachment_69752" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo World columnist[/caption] Declining air volumes and mail volumes make for an interesting partnership. The hope is that e-commerce will save the day on both fronts and that, apparently, is the expectation at the core of the renewed relationship between IATA and the International Post Cooperation (IPC). The two organizations recently signed a memorandum of understanding (MoU) to reinforce their cooperation, and have identified seven specific goals toward which they will work together. Improve the security, handover, carriage, delivery and settlement of airmail between postal operators and air carriers. This includes e-commerce, economic and commercial matters. Develop and maintain industry standards and procedures for both physical flows and electronic data interchange relating to airmail. Align existing services and solutions while also pursuing new services to ensure harmonized compatibility and efficient application of resources. Find technology-based standards and solutions for piece-level tracking in airmail. Address volumetric challenges through initiatives such as Air Packet Box, and allocation and booking procedures for airmail. Develop regional onboarding initiatives and global campaigns on airmail process optimization and standardization. Improve the involvement of ground handlers and other industry stakeholders on matters concerning airmail. “International e-commerce is growing at around 20% a year, leading to rapidly changing market conditions for airlines and posts,” said IATA Director General Alexandre de Juniac. “Ensuring customers get their packages on time, while safety and security in postal air transport is maintained, is the main priority for posts and air transport operators alike. Cooperation across the supply chain is a must and our MoU with IPC is an important step toward strengthening our activity in this area.” Indeed, declining mail volumes and market threats have also led the Universal Postal Union to seek new partnerships as its membership struggles to adjust to market changes. After the U.S. threat to pull out of the organization last year, the UPU is said to now be considering opening membership to the likes of Amazon, UPS, FedEx, Stamps.com and other e-commerce delivery providers. E-commerce is changing the way consumers and businesses acquire goods and services. It takes a nearly flawless supply chain to move packages from point A to point B in as fast a time as possible. Speed is the differentiator. Air cargo is a natural fit for this evolution. Express providers, UPS, FedEx and DHL get it and offer time-definite delivery options to meet the speed need. If other air cargo providers, as well as passenger airlines, want to play a role, they too will need to offer time-definite services. In addition, air will need to be seamlessly connected with a delivery provider such as a UPS, FedEx, DHL, Amazon, Roadie or postal operator. In its E-commerce Outlook 2019 report , Cargo Facts Consulting highlighted postal companies investing in new delivery models such as evening and weekend deliveries as well as the adoption of automated parcel lockers. Innovation and change will lead to success for postal companies and bravo to those postal companies taking the lead. But, to connect with air cargo partners and other supply chain partners, investments in technology will be necessary in order to build a competitive, seamless and transparent supply chain. Issues such as delays and damage typically occur during hand-offs from one provider to the next within a supply chain. And of course, building an exceptional supply chain network and enjoying successful partnerships with all providers is great, but the real goal is doing so while remaining profitable. How many lucrative postal operators are you aware of today? There are a few, but not many. Many postal operators are facing additional business model challenges including relationships with governments, unions and more. According to the IPC, the average weight of an e-commerce package is approximately 200 grams to 1 kilogram. At those weights, it will require a massive volume to equate to profits. To further complicate matters, as consumers, we expect “free shipping.” This expectation will, if it hasn’t already, transfer to B2B shipments as well. Amazon Business is certainly pushing this trend via their Business Prime membership. Of course, we also know that there is no such thing as “free shipping” — someone’s paying for it. We all also read the annual average rate and surcharge increases from FedEx, UPS, DHL and others. Building out the necessary infrastructure to move packages from Point A to Point B isn’t cheap. Some of these companies have been accused of profiting from such increases, but until other providers figure out how to move goods from Point A to Point B successfully and profitably, expect the practice to continue. Partnerships between organizations are great and should be applauded. Collaboration is definitely needed in this environment but more than anything else, action is needed. The same story has been coming out of several organizations for more than 10 years. The time to act isn’t in another 10 years — it’s now.

Consultant Insight: Partnerships are good but action is better for success in e-commerce logistics

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