Are continental freighter networks on the rise in Europe?
What is going to be the reaction to changed market conditions, triggered by online retailers such as Alibaba, JD.com, and Amazon? Fact is that e-traders are increasingly mastering the flow of goods – from door to door. The traditional cargo industry should better prepare for stormy weather.
The online retailers’ penetration into the air freight market is a development clearly evidenced by facts. Buzz words are Prime Air and SF Airlines, seen by the ever-increasing fleets of the U.S. and Chinese carriers. Is their rapid development blessing or curse for carriers whose business model is based on carrying standard and special products? This depends on the flexibility of the last mentioned.
LH Cargo keeps a close eye on e-commerce trends
Asked whether Lufthansa Cargo would invest in narrow body freighters, all Harald Gloy, COO of the Frankfurt-based air freight carrier stated that “We are keeping a close eye on the developments in the e-commerce sector, such as those already taking place in North America, and we are currently considering what role we can play in this.”
If these considerations include operating an own freighter fleet consisting of smaller aircraft such as B737Fs or A320Fs Mr Gloy left open. However, upon request he agreed in his role as chairman of the Air Cargo Community Frankfurt that transporting time-critical e-commerce items – say – from Frankfurt to Athens cannot be accomplished by truck or train within the delivery time the online retailers promise their customers.
Change is in the air
Theoretically, the belly hold capacity of the Lufthansa Group members’ passenger aircraft could be utilized, but their schedules seldom fit the requirements of the e-traders. Hence, the lower decks of Lufthansa, Eurowings or Austrian Airlines could only be a limited component of a broader aerial concept.
Be it as it may, economic data evidence that change is in the air, triggered by the e-commerce sector, massively affecting the air cargo industry. This forecast, underpinned by the contents of charts, was made by two scholars at the Frankfurt-held Air Cargo event: Professor Dr. Karl-Rudolph Rupprecht and Professor Dr. Kai-Oliver Schocke, both from the Frankfurt University of Applied Sciences.
The academics’ main finding: A new supply chain is in the advance stretching from production to delivery, organized, managed and often operated by large eTraders with no intermediate actors along the way in between.
Data is the new currency
A threat, some say wakeup call, even to established integrators. This was illustrated last June by FedEx when announcing to stop the delivery of Amazon packages in the USA.
The e-commerce giant’s main advantage: they have full data access, master all information flows and the physical flow of goods. Thanks to the data footprint left on the web, Alibaba’s, Amazon’s or JD.com’s customers become fully transparent including consumption habits, where they live, how much they spend on e-commerce etc.
And the purchaser’s spending rises fast, as selected figures presented by the two scholars to the 220 attendees of the FRA Air Cargo Community event have demonstrated.
In China, domestic and international e-commerce grew 43 percent year after year from 2012 to 2017, while in the USA it was 15.6 percent annually. Similarly, in Germany. There, e-commerce increased 15.6 percent every consecutive year from 2008 until 2018. A trend, that not only continues unabated but accelerates in times to come, predict Schocke and Rupprecht unanimously.
Join them if you can’t beat them
So how should the traditional airlines, airports, ground handlers etc. react? By becoming part of the emerging new supply chains driven by eTraders or stick to the business they have been part of for long? Neither a nor b, recommend the scholars. Instead they urge players to double or triple digitalization efforts this way optimizing the information flows along the entire supply chain, keep demand-oriented infrastructure in good shape, accelerate safety and security processes at airports, within warehouses and during road transports, share information and cooperate on a sector-wide approach.
The lone wolf times are over, air freight has become a sharing economy, Rupprecht and Schocke unanimously exclaimed.
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Rayhan ahmed (Monday, 02 September 2019 01:13)
Lufthansa cargo should invest in
a A321 P2F because they lack
a narrow body freighter as I explained in last edition .