Ground handling’s role in the e-commerce explosion
THE expanding global cross-border e-commerce sector continues to fuel the air cargo industry. It’s unprecedented, and the future only looks set to get brighter, which is incredibly exciting for those of us behind the scenes in the aviation sector, writes Ignazio Coraci (pictured below, right), chief executive officer (CEO) of cargo carrier SW Italia and ground handling company ASC Cargo.
According to German logistics firm DHL Express, e-commerce hit US$300bn Gross Merchandise Value (GMV) in the past two years and is predicted to grow at around 25 per cent every year as cross-border e-commerce is excelling at a rate rarely seen in traditional retail markets. With the growth of international ‘e-tail’ comes the rise in ground handling.
As noted in 2016, Visiongain valued the airport ground handling services market at US$54m, a figure which is directly cashing in on the hundreds of billions of online retailers such as e-Bay and Amazon as directly building every day, minute and second of the year.
Though the significance of e-tail for airfreight, cargo and ground handling is clear, it is easy to lose sight of the large-scale development needed throughout the entire aviation industry to support this.
For example, if we are expecting such strong growth over the next 10 years, this in turn raises demand for air transport, airline and airport infrastructure expansion.
Together, these have a direct impact on ground handling companies, as CEOs need to keenly look ahead and know when – and where – to expand services to accommodate additional cargo capacity the growing market will bring.
In an increasingly global market, one of the biggest challenges is to work out where to start in terms of evaluating services and identifying direct expansion opportunities.
“..the booming e-commerce business continues to drive forward American mega cities.”
One strong opportunity is certainly in the Asia-Pacific and Middle Eastern regions. Here, the growth forecasts are particularly high. This is largely because of the demand for air travel in these regions. Consumer growth is beneficial as this has a strong influence on where (and how much) airports concentrate investment on developing its infrastructure, which in turn should be welcomed by cargo firms.
To be able to facilitate the business-focused side of aviation, airports need adequate space for ground handling facilities, excellent access to highways and railway systems and skilled and sizeable workforces.
They also need good runway systems to facilitate large freighters – in particular this is an element that London Heathrow is conscious of as we move further into the 21st century.
We also are seeing the emergence of so called ‘airport cities’ to meet the world’s increasingly demanding air transport and cargo handling needs.
Though many of these are growing in south-east Asia, the booming e-commerce business, largely led by Amazon, continues to drive forward American mega cities, with Chicago, LA, Atlanta and New York City perhaps the most prominent among them.
Though huge growth is forecast through much of the industry, it will take a synchronised effort from airports, cargo handlers and even commercial airlines to commit to dedicating financial resources towards unilateral growth.
It’s this growth which will prompt airport expansion to cater for the needs of both B2C and B2B firms. Into the future, we are likely to continue to see this ‘fusion’ where all areas of aviation continue to grow while airport hubs look for new ways to cater for this in terms of creating space, capacity and resource to take us further into an age of borderless, global travel and worldwide commerce.