Boom time: The transformative force of e-commerce in global trade

The global commerce landscape is undergoing a significant transformation, primarily driven by the expansion of e-commerce. The global e-commerce market is projected to grow from $5.8 trillion to $8 trillion by 2027, a 38% increase. This growth is expected to have a positive impact on the air freight industry since about 20% of global air cargo volumes are linked to e-commerce, according to our latest estimates. Figure 1: Global e-commerce projections: 2023-2027

China, the United States, the European Union, Japan and the United Kingdom stand as the largest e-commerce markets, totaling $5.2 trillion in sales. Chinese consumers lead the world in online shopping, accounting for about 52% of all retail sales through e-commerce platforms in 2023. Figure 2: E-Commerce revenue by market 2023

E-commerce sales in the U.S. and China alone surpassed $4.185 trillion, constituting about 72% of world e-commerce sales. Cargo Facts Consulting estimates that the EU contributes $636 billion in e-commerce revenue, making it the third-largest e-commerce market. The world's largest markets grew an average of 10%. India reported the highest growth at about 26% in 2023, followed by Indonesia at 25% and Brazil at 22%. Figure 3: Largest e-commerce revenue growth markets 2023

A key driver for growth in Southeast Asia was the increase in mobile phone use over the last decade, with an estimated 88.9% of people using cell phones in the region. While significant growth is expected, these countries are starting from a much smaller base and there is a significant gap compared to more established markets.

Air freight activity has surged in developing nations alongside the emerging e-commerce industry. In 2023, freighter operations in Indonesia and Southeast Asia have stood out as some of the most dynamic worldwide in terms of aircraft growth. In August 2023, the Directorate General of Civil Aviation granted air operator certificates to three Indonesian freighter operators. In January 2023, Amazon launched a dedicated air network in India in partnership with QuikJet , operating two 737-800Fs across a network of four destinations. As Amazon solidifies its presence in India, speculation has arisen about expansion into other emerging e-commerce nations. In Brazil, a prominent e-commerce partnership involving Mercado Libre and Brazilian carrier GOL has emerged. GOL recently started flying the fourth of six 737-800BCFs on an ACMI basis for the e-tailer.

Despite inflation, U.S. consumer spending remained consistent in 2023. CFC forecasts indicate a 1% to 2% decrease in inflation-adjusted sales in the fourth quarter of 2023 due to economic uncertainties and higher interest rates. In the first half of 2023, there was a decline in revenue ton miles (freight and mail) in the U.S., but by the end of Q3, numbers were 9% above pre-pandemic levels according to the US Census Bureau.

During the 2020 lockdowns, U.S. e-commerce sales grew by 21% while in-store retail declined by 1%, particularly in department stores, electronics stores, clothing stores, and restaurants. E-commerce growth continued into 2021 but slowed in 2022. E-commerce sales activity continues to hover at about 18% of total retail sales, down from the peak in 2020 but above pre-pandemic levels.

In Q2 2023, e-commerce penetration in the U.S. reached its second-highest level in history, behind Q2 2020. Sales from physical stores continue to decelerate, with negative growth posted in Q2 2023. Although in-store retail sales did not reach annual double-digit growth between 2000 and 2020, the five quarters from Q1 2021 to Q1 2022 saw double-digit growth. The increase was temporary since consumers returned to physical stores when pandemic-related restrictions were eased.

The online shopping boom is changing various aspects of the economy. The surge in e-commerce, notably in key economies like the U.S. and China, is driving significant growth in the air freight sector. As a result, 20% of the global air cargo volume is now attributed to the rise in e-commerce activities.

However, while established markets showcase commendable growth, emerging markets emerge as the torchbearers of expansion, especially in Southeast Asia. The e-commerce trajectory, marked by peaks and plateaus, weaves a complex story linked to economic trends and consumer behaviors. The battle between online and offline sales spotlights how e-commerce growth is shaping the future of global trade and commerce.

Boom time: The transformative force of e-commerce in global trade

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