Consultant’s Insight: Keeping momentum beyond e-commerce

MIAMI — Tariffs and e-commerce were the most popular topics discussed throughout the first day of TIACA’s Air Cargo Forum on Nov. 12. [caption id="attachment_57146692" align="alignright" width="262"] Cathy Roberson, Cargo Facts columnist[/caption] The air cargo effects of President-elect Donald Trump’s plan to increase and expand the use of tariffs remain unknown. However, flexible and agile operations will prove beneficial, panelists said during the Industry Leaders Roundtable. “If you’re flexible in the market, you can do it,” Jan Krems, president of United Cargo, said during the session. “It’s been done before and there were not any wide issues.” Rush to ship ahead of tariffs Asok Kumar, head of global airfreight at DB Schenker, noted there would probably be a rush of imports in the next three months ahead of potential tariff increases. The ocean freight market is already experiencing a rush due to: Potential tariffs; The Lunar New Year on Jan. 29; and The Jan. 15 deadline for a contract agreement between East and Gulf Port dockworkers and the U.S. Maritime Alliance. Retailers raised their import projections for November to an increase of 13.6% year over year. They forecasted last month that November imports would be up 0.9% YoY, according to the latest Global Port Tracker (GPT) report, published monthly by Hackett Associates and the National Retail Federation. The November GPT report forecasts a 6.1% YoY increase in U.S. imports in December, up from a 0.2% YoY increase projected in the October report. E-commerce drives demand While this year has been a good one for the roundtable panelists, it has not been a typical one. Global trade saw large shifts from ocean to air cargo due to: Attacks in the Red Sea; Drought in the Panama Canal ; and Booming e-commerce volumes. For some panelists, however, if one removes e-commerce, the base has not been that strong. E-commerce is driving air cargo demand , with estimates that e-commerce represents 20% to 30% of total global air cargo volumes. But e-commerce is sucking up capacity from other customers, according to Kumar. E-commerce represents about 2% of DB Schenker’s volume but its other customers have voiced concerns about rates and capacity. “Be responsible and don’t forget other customers,” Kumar told the audience. Looking to other sources In contrast, United Cargo stays away from e-commerce, despite having Amazon as a customer but with “forwarders in between,” according to Krems. To encourage growth in cargo volumes beyond e-commerce, Swissport’s Dirk Goovaerts highlighted how Swissport is working with airports to create unique solutions such as creating import flow from Nairobi’s flower growers to Belgium. Goovaerts is chief executive of continental Europe, Middle East, Africa and India, and global cargo chairperson at Swissport. Meanwhile, Tom Bradley, global director and general manager of air cargo at Amazon, promoted the recently announced Amazon Air Cargo service, a third-party air cargo provider. The service is available in the U.S., Europe and India. It operates about 100 airplanes with a hub-and-spoke network and point-to-point service, similar to integrators. Outlook So, what does this all say about the air cargo market? Agility and flexibility are required. Technology investments are necessary to increase productivity and increase efficiency. Speed will also be important. But will customers pay the price? Some may, but e-commerce customers, particularly those based in Asia, will likely turn more to their home cargo providers, which are typically government-subsidized and able to provide lower rates. However, there are lingering questions regarding e-commerce. How sustainable is this current drive? And more importantly, how profitable is it for air cargo providers? Capacity will remain a concern for non-e-commerce customers, particularly when manufacturing activity improves. Register now for Cargo Facts' essential regional events for industry stakeholders: Cargo Facts LATAM 2025 on Feb. 10-11 at the Pullman Sao Paulo Guarulhos Airport in Brazil; Cargo Facts Asia 2025 on March 24-26 at the W Shanghai in China; and Cargo Facts EMEA 2025 on May 6-8 at the Shangri-La Bosphorus in Turkey.

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