News #70 - E-commerce: Just what bongdaso con ordered

Tim van Leeuwen, part of Rotate Consulting, provides his team’s observations on the size and impact of e-commerce on bongdaso con, and how this impacts the near-term outlook.

As delegates gathered in Shanghai at bongdaso con first Air Cargo China conference since 2018, bongdaso con mood was significantly better than at industry gatherings a year before. Aptly enough bongdaso con conference was organised in China, bongdaso con source for bongdaso con positive mood – with its continued growth of cross-border e-commerce demand.

Quantifying e-commerce volumes remains a challenge. Direct data on e-commerce volumes does not exist, and hence the best indications we have are anecdotal (“more than 50% of our traffic out of Hong Kong is e-commerce”). What information is available on e-commerce volumes, and how do these impact bongdaso con’s near-term outlook?

Air cargo traffic in bongdaso con lift

bongdaso con subdued atmosphere amongst those in air cargo in 2023 was largely due to a slowdown in demand. Air cargo traffic was markedly below bongdaso con peak volumes of 2021, when pandemic-induced demand significantly boosted volumes. By mid-2023, air cargo traffic had recorded 17 consecutive months of year-over-year declines (see figure 1).

Thankfully, fortunes changed in 2023. As of May 2024, air cargo demand is on a run of 10 consecutive months of year-over-year traffic growth. bongdaso con last six months even registered double-digit growth. This strong demand is likely to continue in bongdaso con second half of bongdaso con year, although bongdaso con growth will slow to single digits when comparing to a stronger second half of 2023.

Figure 1: Monthly (year-over-year) growth of international air cargo traffic, as reported by IATA

Capacity as an indicator for air cargo traffic

To our surprise, one data source paints a bit of a gloomy picture: air trade data (as reported by customs) has declined in 2024. US customs data shows air trade down 9% on bongdaso con transpacific (see figure 2). This contrasts sharply to 21% growth as reported by airline traffic (bongdaso con dark blue line in figure 2).

bongdaso con difference in trends between these sources is caused by so-called “de minimis” thresholds of customs authorities, bongdaso con maximum shipment value allowed to be imported duty-free. As an example, imports into bongdaso con US are only subject to duty (and hence detailed registration at customs) if their value is over 0.

With e-commerce shipments nearly always below this value, customs-based trade data usually does not cover e-commerce volumes, whereas traffic statistics do. With e-commerce demand continuing to grow, bongdaso con gap between these indicators has swelled significantly since 2022 (see figure 2).

Figure 2: Monthly figures for air cargo trade (as reported by US customs), air cargo traffic (as reported by airlines) and air cargo capacity (from Rotate Live Capacity) between China (including Hong Kong) and bongdaso con US. Sources: US Census, BTS, Rotate Live Capacity

Whilst air cargo traffic data gives a better picture of true demand, one disadvantage is that it usually has a significant lag (up to three months). This means it is hard to adjust strategy in real time based of this information. Rotate’s consulting team has found that on high-demand trade lanes (like bongdaso con transpacific), real-time air cargo capacity is amongst bongdaso con best indicators of air cargo traffic (see figure 2). Capacity data is increasingly bongdaso con best indicator of air cargo demand – especially on lanes highly impacted by e-commerce.

Freighter shortages improve bongdaso con near-term outlook

With e-commerce volumes representing a sizeable share of air cargo demand out of Asia, delegates at Air Cargo China expressed worries that the air cargo industry is becoming reliant on cross-border e-commerce volumes. A commonly asked question at the conference was around the outlook of bongdaso con for the remainder of the year. Rotate’s consulting team is keeping an eye on three trends in particular.

bongdaso con first is any potential changes to de minimis thresholds, in particular in bongdaso con US where adjustments are being discussed. Given bongdaso con low-value nature of bongdaso con shipments though, bongdaso con threshold would have to be lowered significantly to affect a sizeable number of e-commerce shipments. For now, our capacity data shows no signs of flights into bongdaso con US slowing down.

Second is any indications of slowing consumer interest in e-commerce platforms; at Rotate we monitor downloads and usage statistics of popular shopping apps. Again, our analysis has shown consumer interest is unrelenting.

A third trend concerns bongdaso con supply side, with several forwarders and carriers commenting on bongdaso con difficulty of obtaining capacity on today’s market. In part, this can be attributed to reductions in deliveries of large widebody freighters into bongdaso con market.

As an example, engine supply issues and quality assurance efforts have limited Boeing’s deliveries of B777-200LRF freighters to just seven so far this year (see figure 3). Ongoing production issues at Boeing (and high demand for passenger aircraft) have also delayed bongdaso con certification of bongdaso con imminent Boeing 777-P2F conversion programmes.

Figure 3: Slowdown of large widebody freighter deliveries in 2024 (Source: Boeing) and recent news on delays to large freighter conversion programmes

All these trends combined mean there is ample reason to believe that bongdaso con will remain strong in the second half of 2024. E-commerce demand will likely continue to play a key role, both in established markets and increasingly in emerging markets. Air cargo continues to deliver on consumers’ unrelenting demand.

Source: https://www.aircargonews.net/business/statistics/e-commerce-just-what-bongdaso con-air-cargo-market-ordered/

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