Cross-border Ecommerce Continues To Dominate Air Cargo Markets

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Ecommerce continues to be air cargo's star performer, dominating China's export market and absorbing capacity to Europe and the US, according to a senior industry executive.  

"The overall market in 2024 so far has produced decent growth in general cargo [+3%], complemented by a heavy surge in ecommerce business driven by the new Chinese market entrants," Geodis's EVP freight forwarding, Eric Martin-Neuville, told The Loadstar.  

"This has led to global growth of approximately 10%, significantly above the various forecasts. Capacity has continued to grow on the back of the demand increase and we are now in 'a Covid period-type' situation where anything that can fly is in the air to accommodate the ecomm flows.

⁘This has led to firm prices that have stabilised at a rather high level. Not only is ecommerce pulling capacity from scheduled commercial routes but from charter type activity too, making the latter more costly."  

Ecommerce is traditionally a high-volume/low-value type business, reflected in the (relatively low) rates and one that does not require a lot of added-value services on top of the airport-to-airport carriage, Mr Martin-Neuville explained.  

Commenting on the imbalance in trade that ecommerce has largely brought about on major air cargo routes – load factors out of Asia being extremely high and into Asia much lower than usual – and the challenge this poses for forwarders, he noted: "The imbalance is more related to supply than to demand. The large number of dedicated ecommerce flights are creating a significant surge in backhaul capacity which is putting pressure on the market and on pricing."  

Turning to other major verticals for air cargo, hi-tech and pharma were performing well. Those which have been less successful include traditional fashion retail, which has seen tonnage drop and, under economic pressures, has favoured ocean freight to air. Meanwhile, luxury goods, especially into China/APAC, have seen a drop in demand, resulting in some modal shift to cheaper and lower-carbon ocean alternatives.