E-commerce has created a huge upheaval in the air cargo industry. The process may well be unstoppable, creating capacity problems that will also impact general cargo. This is one of the takeaways of a dedicated forum at Liège Airport (LGG), last week.
The venue for the ‘EU Cross-Border e-Commerce Forum’ was well chosen. Last year, Liège Airport handled 330 million e-commerce parcels and for the last 8 months of 2024, over 500 million have already been handled. The cross-border element of this must be seen within the framework of a global place, said Yossi Shoukroun, CEO of Challenge Group, LGG’s oldest customer and main sponsor of the event.
“The winds of change are blowing. This demands excellency, consistency and reliability. The stakes are higher than ever, especially as we are living in a volatile and uncertain world. Air freight and dedicated freighter operations are more crucial than ever. The question is: are we investing enough in infrastructure, technology and people?”
Demand outpaces capacity
According to Ryan Keyrouse, CEO of Rotate, a software and consultancy company focusing on air cargo, a survey with over 50 respondents has revealed that e-commerce is believed to be a key segment, but not yet profitable. Mr. Keyrouse drew attention to seven consecutive months of growth in the air cargo industry of 14%, globally.
This sharply contrasts with the 7% of capacity growth and the 14% growth in demand. “These facts have led to constrained market conditions and growing imbalances, that have increased the gaps in one-way profitability,” he said.
Due to under-reported customs data, the growth of e-commerce is hard to calculate, but estimates show that in China the segment has grown by 22% over the last 2 years, in Europe by 21% and in the U.S. by 23%. For this year, air cargo growth is likely to be another 11% to 12%, and in 2025, 7%. If split up, the latter percentage is made up of 20% growth in e-commerce and only 2% in general cargo.
“This growth could well be unlikely, as capacity is likely to limit the growth in demand,” said Mr. Keyrouse. “Then there are also risks in misdeclaration and political moves.”
Apart from the growth ratio scenario mentioned above, Ryan Keyrouse brought in another scenario of an 8% rise in e-commerce volume and 0% in general cargo, giving an overall growth figure of 2%. “Either way would put the air cargo industry into unchartered territory. The flights on the key trade lanes are always full and the aircraft are in flight almost full-time. Re-deliveries will also add to this limited capacity,” he concluded.
Cannibalizing on general cargo
In the panel discussion on the future of e-commerce, Richard Broekman, Chief Commercial Officer and Head of Sustainability of Atlas Air, seconded the opinion that capacity is the only factor that can limit the growth of e-commerce.
The forwarders, for their part, fear that the growth of e-commerce may cannibalize on general cargo. Asok Kumar, Vice-President Sales and Key Account Management at DB Schenker (Asia Pacific), said that the forwarders too need to know what is happening to e-commerce because it is an important factor in the market. “How do we cater for the traditional segment of the market?” he asked. “How do we support the entire air freight market to be able to grow in a sustainable way?”
800 freighters that will not be there
Air One Aviation’s Chief Commercial Officer, Peter Scholten admitted that the cargo operators are putting all their capacity on the e-commerce market: “e-commerce requires a fleet of 800 freighters, but these 800 are not going to be there in the next few years. This also increases the imbalance.”
Schenker’s Mr. Kumar pointed out that the forwarders have (often long-term) commitments to their customers that they like to respect. “We have secured capacity which can be used to accommodate e-commerce as well.”
This may have an impact on the rates, which will also have consequences, said Stefan Krikken, Head of Airfreight Global DSV: “As air freight becomes more and more expensive, lower-yield goods will shift to other modes.”
