E-commerce has emerged as one of the most important trends in the shipping industry. It allows companies that operate in that sector to get in touch with their clients using easy, fast and convenient means. The use of e-Commerce platforms is likely to extend the season. This means cargo companies can now increase orders throughout the year.
Previously, the peak seasons were well-known. Shipping concentrated on them in order to maximize profits. However, the needs of consumers and the stiff competition within the sector meant that many cargo companies were looking for ways to extend the season. It seems the internet provided that solution. This comes at a time when the shipping industry is facing problems. There is also a new wave of protectionist feeling across the globe. It is spearheaded by the present administration in the White House.
Some industry analysts have speculated that this kind of approach could jeopardize the industry because it discourages international trade.
Impact this year
There is increased demand for fresh produce. At the same time, customers tend to prefer perishable items such as fresh fruit, Australian sirloin, Chilean frozen salmon, and Vietnamese basa fish. Seasonality has gone out of the window. The internet has provided new opportunities for meeting customer demand across the globe with clients that may be situated in different time zones and seasonal dynamics.
Cargo companies have to anticipate the cross-border shipments will be time-barred but unexpected. This is because the seasons keep changing. The high amounts of money mean that the stakes have been raised. Retailers like JD are providing China with a lucrative supply chain. They are helping it to become a leading exporter. Online ordering is driving the market at the moment. On the 11th of November, 2017, more than 1 million retailers took part in the China-based Singles Day trading. For example, Alibaba sales were clocked at $25.3 billion, an increment of $7.5 billion when compared to the previous year. JD started its Singles Day trading even earlier on the 1st of November, netting $19 billion in sales. That represents a year-on-year increment of 50%.
This is also having an impact on cargo companies and logistics services suppliers. For example, CEVA released its third-quarter results indicating a freight growth of up to 12% when compared to the previous quarter. Its official view is as follows: “Market volatility in air freight rates continues, notably on routes ex-Asia…Volume planning and pricing measures have enabled us to mitigate that pressure to a large extent.”
The trend has extended to cargo patterns where air travel now dominates. However, the cargo carriers are dealing with heavier and bulkier items, which may require a reconfiguration of the operational side of the business. There have been some infrastructural developments that are meant to help deal with the influx of goods. A case in point is the $392 million expansion of the Central Asia Hub. It is located at the Hong Kong International Airport. Greg Guillaume of Atlas Air Worldwide Holdings is of the view that “Over the longer term, e-Commerce will account for an increasing share of retail sales–the mega-trend of our times.”
These changes are partly driven by the ordering patterns of companies like Amazon Prime Air. Others like JD Worldwide, T-mall Global, and Koala are increasingly making it easier for their customers to order online. It is anticipated that the cross-border e-Sales in China will exceed the $100 billion mark by the end of this year with an average spending of over $800 per person.
As China improves its image in terms of high-quality original goods, its brands will continue to prosper. According to Shelleen Shum of eMarketer, “…the average Chinese consumer is now more tech-savvy, more exposed to foreign brands through overseas travel and the internet, and, crucially, more willing to spend.” This does not just apply to the Chinese consumer but cuts across the globe. The internet has provided people with choices and the ability to move to markets that take their fancy in an instant.
The context of all these changes is no less interesting. There is the issue of market volatility that affects all the economies that are engaged in international trade. Despite the sanctions on countries like Iran and North Korea, e-Commerce provides new opportunities for reaching consumers in all parts of the world as long as they are connected to the internet. All the major players within the industry are thinking of ways of circumventing any bureaucratic obstacles that may be preventing them from accessing their target customers.
The consumerist society is not showing any sign of slowing down. Indeed, emerging economies such as China are dominating the orders for goods. Meanwhile, the cargo carriers have an easy way of ensuring that books are done on time and the deliveries are accurate according to the specifications given to them. Rather than posing any threat to the industry, e-Commerce may yet turn out to be one of the many potential saviors of shipping in this millennium.
The Future of the Shipping Industry and E-Commerce
Opportunities for the industry as a whole, national boundaries, and the inherent restrictions that they imply are beginning to lose meaning. This is because of the existence of e-Commerce. Even where a protectionist trade policy is pursued, consumers are still able to access the goods of their choice at affordable prices. This is an advantage to countries like China, which thrive on being able to mass produce for the consumerist society.
The use of e-Commerce is not without its glitches. Computers may fail at any moment. If there is over-reliance on them, customer care begins to decline. Besides, there are still many companies within the industry who will continue to order services in the traditional way. The industry should be prepared to embrace e-commerce whilst also not losing sight of the original methods that sustained it up to this point. Of course, monitoring and evaluation of the situation will be an important business activity for all cargo companies.