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January 6 2020

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138 The Journal of Commerce | Januar y 6 2020 www.joc.com Air Cargo 2020 ANNUAL REVIEW & OUTLOOK Much of online shopping com- prises individual items involving cross-border air transport, and the packaging around each product takes up more space. This affects the volumetric nature of the shipment, translates into less chargeable weight, and drags down the yield. It is profitable for integrators because they control the parcels from door to door. Faster transits The core selling point of main- stream airlines is rapid intercon- tinental transport, but carriers have struggled to leverage this to provide a more efficient service. For instance, industry data from the International Air Transport Asso- ciation (IATA) shows the average delivery time for traditional air cargo is 6.5 days, a level that has improved only marginally over the past few Integration chase Airlines seek greater share of e-commerce market via door-to-door offerings By Greg Knowler Thanksgiving weekend and a 17 percent increase in global web sales during 2019, according to researcher Digital Commerce 360, airlines have been stuck carrying parcels in unprofitable point-to-point roles. "E-commerce takes away the value and gives back volume to airlines at very low prices," Stan Wraight, pres- ident and CEO at Strategic Aviation Solutions International, told The Journal of Commerce on the sidelines of a recent air cargo conference. is promoting trade through the Belt and Road initiative. Equity markets are also at a record high, so there are very mixed scenarios." The uncertainty for air cargo caused by stuttering US–China trade talks was also raised by Bill Flynn, CEO of Atlas Air Worldwide, during a third-quarter earnings call. "Do we get a Phase 1 agreement with China, and what does that lead to?" he asked. "We're looking for some uptick at this point as we move into 2020 with some improve- ments as we get into the second level of calmness to perform, and Polmans said this was the biggest challenge that air cargo was facing in the year ahead. "There is a whole level of uncer- tainty that has been created today — Brexit is on, then it's off, then on again. Trade wars, retaliatory tariffs. This is not helping international trade, and a lot of countries are having a nationalistic reflex to the trade situations they are facing, and this is leading them to look for local and bilateral solutions rather than multilateral solutions. It is not an environment where global trade can flourish." Hughes agreed, saying that although the long-term outlook for air cargo is positive and will grow steadily along with the global econ- omy, predicting the near future at the moment was difficult. "We are in unprecedented times. There is policy uncertainty around the world, yet we have record low levels of employment, we have rising wages, we have the world's largest economy taking a nationalistic approach, and a country that was traditionally closed AFTER YEARS OF struggling to turn fast-growing but low-yield e-commerce cargo into profitable payloads, some of the world's major airlines are fighting the integrators to control more of the door-to-door delivery market. Several carriers have launched cross-border e-commerce delivery platforms over the past year. IAG — the parent of British Airways and Iberia — has Zenda, Lufthansa has heyworld, Emirates Airlines has Emirates Delivers, and Air Canada and Delta have launched their own e-commerce delivery systems. All of these systems are designed to capture more of the e-commerce delivery market that has been totally dominated by integrators and online shipping giants such as Amazon, Alibaba, and JD.com. Despite an 18 percent increase in retail e-commerce sales over the "If the air cargo business could organize itself to deliver a product the same day it arrived on the ground, it's a winner."

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