It is widely believed that Sting’s “Ten Summoner’s Tales” was, in 1979, the first ever item purchased online – marking the birth of e-commerce.
However, it was another fifteen years before the first secure transaction could be made, for the same piece of music, but this time on CD.
And it is also generally accepted that the first cross-border ecommerce transaction took place sometime in the mid to late 1990s, as access to the World Wide Web began to expand.
Today, the global ecommerce market is simply vast, with mind-blowing statistics everywhere; in 2019, ecommerce value was estimated at $26.7 trillion, about 30% of world GDP, according to a 2021 report by UNCTAD, the United Nations Conference on Trade and Development.
On the B2C side, to take one example, in April 2023 there were 5.9 billion direct visits to Amazon.com, according to Statista.
But it is a fragmented, complex market; B2B, B2C, and more recently growing C2C purchases combine to create a demand on the global delivery ecosystem that today is still soaring.
And misconceptions are still prevalent; those Amazon visitors are all would-be B2C consumers, and we generally believe B2C purchases make up the bulk of global airfreight – but around 75% of ecommerce shipments by value are B2B transactions, and around 60% by volume.
Build it and they will come
There are over 5 billion people connected to the internet today. Consumers can shop anytime, from anywhere, using virtually any device, in the same way that businesses can order raw materials, components, and finished goods.
This extraordinary expansion of access, convenience and underlying infrastructure has created a near-insatiable demand, the impacts of which have been felt in every corner of the globe, and have driven innovation in multiple industries and technologies. Online platforms have proliferated, and the underpinning transportation and logistics networks, and supply chain infrastructure, have developed in step.
Yet that demand isn’t slowing down, and is driven by surges in all types of ecommerce. Today, cross-border e-commerce is a thriving sector of the global economy, driven by advancements in technology, logistics, and trading arrangements. According to a report by eMarketer, global cross-border ecommerce sales reached $4.28 trillion in 2020, representing a substantial portion of total ecommerce transactions worldwide.
The airline industry is the key part of this growth – IATA says 80% of e-commerce goods by value travel by air. Airlines have had to respond to the growth in demand for international cargo shipments either by using existing aircraft capacity or creating more. In reality, they could only opt for the latter.
Almost all long-haul passenger airlines now have separate cargo operations. Most short-haul don’t; the need for quick turnarounds precludes spending time loading and unloading cargo.
Whilst consumers look for choice, value and quality, manufacturers have become utterly dependent upon components and raw materials sourced from across the globe, often arriving ‘just-in-time’ to make their products; the international B2B ecommerce market is projected to reach $20.9 trillion by 2027, again according to Statista.
But it’s not all driven by consumer and business demand; as express air connections are made, markets are opened and trade flows.
To take one example, there has been significant growth in imports from India into the UK over the last two years, in part driven by a significant local market for Indian products within the UK, but also because of simply growing capacity at Indian airports and an increase in the number of direct links to Heathrow.
What can be measured
Amongst the multiple innovations and technology advances the proliferation of mobile apps and online platforms has given customers accurate tracking, real-time updates, and personalised communication – in short, much greater control and visibility over their shipments. These digital solutions streamline order placement, payment processing, and returns management – still a critical element when buying online.
Most airlines have made strides in improving their technology offering for their cargo product, but this remains behind developments in their passenger businesses.
Although there are trends in the B2C market towards speed being less important for exports from the UK, the UK shopper remains demanding, and this is critical for importers into the UK. For B2B speed can be less important, but when it is required the demand for certainty is usually critical.
General cargo products inability to easily capture and track item level data sets is problematic for ecommerce shipments where you have consolidations that contain many thousands of different items going to many hundreds of different recipients.
Capturing key data around customer preferences, speed of on and off-boarding, the online selection and ordering process, and other metrics, results in an increase in the ability to manage or influence these key measures. Only by knowing how you’re doing today can you hope to do better tomorrow.
B2B2C2C
Fast, easy access to international markets has transformed global trade and the ability of UK businesses to compete. Whether it’s a manufacturer buying raw materials or components, or a wholesaler buying finished goods to sell on, the ability to source from literally anywhere enables organisations to optimise the balance between price, quality and choice – ultimately increasing their competitiveness.
- B2B ecommerce typically involves larger volumes, higher average order values, and longer-term contracts compared to B2C transactions.
- B2C ecommerce is facilitated by global marketplace platforms such as Amazon and Alibaba, which connect consumers with sellers and merchants from around the world.
- C2C e-commerce platforms enable individuals to buy and sell goods directly from/to other consumers, regardless of location. Online marketplaces, such as eBay, Gumtree, and Craigslist, support these peer-to-peer transactions.
And whether it’s B2B, B2C or C2C, everything is dependent upon a fast, reliable, secure, convenient and affordable courier network that spans the globe yet reaches right along that famous last mile to your doorstep.
To complete the ‘commerce’ picture, mobile commerce, or m-commerce, has emerged as a significant driver of ecommerce growth, with mobile devices accounting for a growing share of online sales globally.
Meeting all these requirements sounds like Mission: Impossible, especially when you add in regulatory complexities, lack of cargo capacity and shortage of nighttime flying slots.
So, how do you make the seemingly-impossible possible?
In simple terms, you automate and innovate. Automation, artificial intelligence (AI), and machine learning algorithms optimize route planning, package sorting, and delivery processes, reducing transit times and costs. To meet the particular needs of ecommerce customers, logistics businesses need to get much better at data sharing to continue to simplify the experience for ecommerce businesses.
Room to grow
Airfreight in general accounts for only around 0.5% of UK total international movements by weight but about 45% of them by value, according to a report by the Freight Trade Association, hence its critical role in the UK economy.
There are around 70,000 domestic SME businesses online that don’t trade internationally but would like to, according to a report prepared by the Social Market Foundation, and supporting them to access global markets would be a hugely positive development both for the logistics sector and the wider UK economy.
The government has set up an ecommerce trade commission to explore how to support this, and many interested parties, including CFL, are engaging with the commission to support this ambition.
Ecommerce adoption is particularly pronounced in emerging markets, where internet penetration rates are increasing, and consumers are gaining access to online shopping platforms. Rising disposable incomes and an expanding digital infrastructure underpin these trends.
One way to take advantage of such opportunities could be to extend the express courier facilities enjoyed by Heathrow to other, smaller airports around the country. Today, cargo in and out of Heathrow is more than the sum of all other UK airports cargo shipments taken together.
Manchester or Gatwick, on a smaller scale, could offer useful gateways with a dedicated courier facility – something that was actively discussed before the pandemic and may well emerge again soon.
Where there is no dedicated courier facility, airports may have demarked areas for courier shipments – but they are often handled no differently from general cargo and do not benefit from expedited handling.
Taking this argument further, a greater number of overseas facilities like those at Heathrow could create a network whereby ecommerce importers and exporters would have greater access to integrator-like services, with wider choice and greater certainty over service consistency.
The development of this network capability would be a powerful tool to support UK couriers and support the growth of diversity and choice for ecommerce retailers.
However, for airfreight to support ecommerce more effectively, different levels of data management are required. Airfreight is predicated on large consolidations that do not sit comfortably with tracking individual parcels or items – a critical requirement for ecommerce shippers. So express courier providers must develop systems to support their customers and affiliated airlines in capturing this data so it can be used to accelerate clearance, customer visibility, and where necessary support returns and duty and taxes recovery.
Conclusions
Cross-border ecommerce is a heady mix of B2B, B2C, and C2C transactions, combining to create an enormous global flow of raw materials, components and finished goods.
While B2B transactions traditionally dominated, the growth of B2C and C2C ecommerce has expanded the scope and scale of international commerce, creating new opportunities for businesses, consumers, and the delivery ecosystem.
Expansion of capacity and cargo flight slots will help meet the surge in demand, as will the expansion of express courier facilities around the world.
However, obstacles such as regulatory complexity, data security risks, and supply chain disruptions, create constraints within which the industry must operate. ‘twas ever thus.
As ever, the answer is to innovate, and the express courier industry is trying to find ways by adopting and adapting technology. But the wide technology disparity across the ecommerce ecosystem has led to serious fragmentation – a situation not helped by the perpetuation of legacy systems. But as with many areas of life, with this challenge comes opportunity.
We’ve come a very long way from that single, insecure, slow purchase of Sting’s album in 1979.
