Can e-commerce eliminate air site visitors?

In the heyday of several years, e-commerce really exploded during the health crisis. According to the International Air Transport Association (IATA), in 2021 the sector grew by 30% compared to the previous year and reached a value of about $ 4.5 trillion. Its development lasted several years ahead of pre-crisis forecasts. Thus, in 2025, it could approach 7,000 billion dollars. And if the main global airline association is closely interested in these figures, it is because air has established itself as a major vector of international e-commerce transport. Today pushed into the background, maritime and rail can still play the card.

The explosion of e-commerce is driving air freight traffic

Thanks to its phenomenal growth, e-commerce has quickly become a necessity for air transport and now accounts for 18% of its revenue. This share is expected to rise to 22% this year. But the plane has also become necessary for the international development of this sector: according to IATA, 80% of cross-border shipments related to e-commerce in 2021 went by air. Air transport thus represented 20% of the total value of the sector, almost $ 1,000 billion. This is despite still significant capacity problems, related to the decline in passenger traffic (cargo in storage represents 70% of air cargo capacity in normal time) and difficulties for carriers to keep pace with growth.

The explosion of e-commerce is driving air freight traffic

Speed ​​comes first

This dominance is explained by several e-commerce-specific factors for which an airplane offers an incomparable advantage over a ship or train. For Eric Martin-Neuville, general manager in charge of freight forwarding at Geodis, he is categorical: speed is today the main criterion in e-commerce processing.

This opinion is quite widely shared by other carriers, especially express experts. For Philippe Prétat, CEO of DHL Express France, this dominance of speed in e-commerce is due to the desire of individuals who want delivery as fast as possible. Therefore, he sees traffic that is mostly exhausted by air, able to offer speed that is impossible to achieve by boat.

In fact, several carriers have just switched to air transport to exploit the growth potential of e-commerce. CMA CGM, a maritime transport expert, launched air traffic just a year ago with four Airbus A330-200Fs, which will be boosted by two Boeing 777Fs in the spring. The group has ordered four new A350F aircraft, which will be delivered after 2025. Similarly, SNCF subsidiary Geodis has been using its Airbus A330 since last summer.

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Environment in mind

Affirming this speed primacy, Jérôme Ovion, Vice President of Southern Europe Road Networks for Fedex Express and until recently in charge of hubs and transport operations, presents a slightly broader vision in e-commerce mode selection criteria: “We also see a lot of reliability: when you announce delivery to D +1, you have to stick to that. Finally, the environment is an important element of the conversation with our customers, not necessarily with the end customer, but with the shippers. “

In this context of increased environmental considerations, the aircraft could suffer from a high carbon footprint. For example, it accounts for more than 80% of DHL’s emissions or emits about 50 times more CO2 per kilogram of cargo transported than maritime cargo.

If he readily acknowledges that the environmental criterion is increasingly being taken into account when choosing a mode of transport, Sebastian Wouters, global director of e-commerce at Kuehne + Nagel, is somewhat easing the pressure. He explains that it largely depends on the behavior of end consumers, who are constantly changing, and their propensity to shop on the other side of the world. Transport accounts for only 5 to 10% of the e-commerce’s carbon footprint, according to Carbone 4.

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stay competitive

However, more and more companies are implementing solutions to reduce their environmental footprint. This is the case with integrators, who manage shipments from end to end. Fedex has thus announced its intention to be carbon neutral in 2040, while DHL aims for 2050, with several billion euros of investment in rebuilding its fleets, purchasing sustainable aviation fuels, optimizing its operations in flight and on the floor.

This may also include merging shipments with weekly rather than daily shipments, as Sebastian Wouters notes. But the latter warns that these options have a price that buyers must accept.

Especially since this environmental dimension comes at the peak of rising air fares during the crisis. According to IATA, the price per kilogram transported per kilometer was about three dollars in 2021, compared to the average of 1.8 dollars in 2019. Despite the gradual return of capacity with the continuation of passenger flights, prices should remain around 2.7 dollars in 2022.

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Boat and train have other advantages

The ship, which plays on the size of the transported quantities in order to reduce its ecological and economic balance, could therefore do well. In Geodis, Eric Martin-Neuville is convinced of this in any case: “I think they are the main operators, big platforms are forced to watch and I think we will have a modal transition to the sea for environmental reasons and for economic reasons for part of their offer.

Sebastian Wouters joins him on this issue. The head of e-commerce for Kuehne + Nagel even mentions the third way with rail, especially for high-end brands. This is particularly evolving between Europe and Asia, with exponential growth since 2014. China is therefore strongly developing its infrastructure through large subsidies, with organization around hubs and an increase in the number of trains in traffic. “It offers a medium option between sea and air, with twice the speed of the sea and half the price of air,” he says.

The two agree not to oppose different modes of transport. This is also the case with Fedex, Jérôme Ovion believes that strong growth in demand will affect all modes of transport.

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Disintegration per customer …

Eric Martin-Neuville also sees complementarity between modes of transport depending on the typology of “e-retailers”. Combining the speed of transport with little need for infrastructure, air transport is essential for the smallest retailers operating only in B-to-C: “their model only works with a short delivery time. I don’t see it shrinking and I don’t think so the environmental aspect is so affected. “

On the other hand, he believes that leading players are able to at least partially get rid of air transport in advance by positioning stocks as close as possible to end customers. This is especially true for global platforms such as Amazon or Alibaba, which have large warehouses around the world. In fact, these giants can invite the sea and rail to deliver this B-to-BC model, and the need for speed is felt only in the last kilometers between the middle warehouse and the end customer. “This implies a strategic choice of stock values, which can be very high,” warns the director of freight forwarding at Geodis.

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… and products

For Sebastian Wouters, the slider between different modes of transportation also depends largely on the type of product. E-retailers positioned on low value-added goods will favor solutions at the lowest price, while the luxury or fashion industry will seek solutions that are distinguished by a high level of service. He also mentions geographical criteria, especially dictated by the available infrastructure.

Kuehne + Nagel’s head of e-commerce therefore relies on flexibility between air and sea solutions to meet the needs of its customers, especially in the event of unforeseen events or changes in demand – frequent data in e-commerce: “Sometimes you have to move things from overseas to air transport at a higher cost or even a plane charter. We do all these things based on the situation and the need to help our clients and we have those options available to them. “

Kuehne + Nagel especially offers a solution called “Sea-Air”, playing on both sides to optimize transport costs and time. Typically, cargo leaving Asia can reach the Middle East by boat before being transferred there by plane to avoid a long and expensive passage through the Suez Canal.

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