Air cargo operators and logistics services providers are heading into the Black Friday weekend shopping frenzy at the end of a year, which has filled all available air cargo capacity, more than doubled freight rates, and given a healthy boost to the plane charter business.
All expectations are that today’s Black Friday, Cyber Monday at the other end of the long Thanksgiving weekend, and the rest of the holiday season will generate record growth in sales in the United States and Europe.
A spokesperson for International Airlines Group (IAG) Cargo, which comprises the air cargo arms of British Airways and Iberia, said the company was experiencing record business. “This year we have seen the highest ever demand for air freight capacity across our network in the run up to Black Friday,” he said.
“There has been a spike in consumer technology deliveries — particularly smartphones and related accessories — from Hong Kong to the United Kingdom and fashion retailers have also been shifting significant last minute volumes from India into the United States and United Kingdom.”
Also reporting soaring demand is UK-based logistics operator Europa Worldwide, which has experienced a 20 percent increase in orders over the past four days of the online bargain shopping period. Each year the Thanksgiving weekend creates a spike in demand across a range of sectors and geographic areas.
“This year for Black Friday and Cyber Monday we have employed 115 additional temporary staff across our three warehouses and seen orders spike by 20 percent, which has kicked off our busiest time of year with a bang,” said Maria Torrent-Marc, logistics director at Europa’s warehouse division.
Karen Reddington, president of FedEx Express Asia Pacific, was expecting a record 380 to 400 million packages to be shipped through its global network over the season that officially starts today on Black Friday and runs to Dec. 24. She said in a statement that growth of cross-border e-commerce, where consumers shop and ship from e-tailers outside their home country, was turning the peak shipping season into a global phenomenon.
“While an online purchase is as easy as just a few clicks, logistics providers like FedEx are working hard behind the scenes powering every moment in an e-commerce shopping experience,” she said.
Rival integrator UPS is expecting holiday sales to increase by 5 percent when it will deliver more than 750 million packages globally in the 25 days between Thanksgiving and New Year’s Eve. “Retail industry sales forecasts indicate another strong holiday season,” said Kate Gutmann, UPS chief sales and solutions officer. “Online and mobile commerce has transformed the retail industry.”
According to the National Retail Federation, retail sales in the United States during November and December are forecast to increase 3.6 to 4 percent, reaching between $679 billion and $682 billion, beating the five-year average of 3.5 percent.
Total cross-border e-commerce sales in China are expected to reach $100.17 billion by the end of 2017, with the average spend per cross-border digital buyer at $882, according to eMarketer research. Average spend per buyer has increased because of growing awareness of overseas brands in China, as well as better logistics and the perception that foreign goods are of better quality.
Much of the products ordered online will travel to their destination countries via air. China’s largest retailer JD.com said that 30 percent of the company’s cross-border volume purchased through its online platform was shipped as air freight.
This was highlighted by the IAG Cargo spokesperson. “The benefits of air freight, namely its speed and reliability, allow retailers to be more agile in reacting to last-minute upswings in consumer demand,” he said.
But so tight is capacity out of China that digital forwarder Flexport was forced to charter a Boeing freighter from Hong Kong to Los Angeles on Nov. 19 and expects to charter a second aircraft later in the holiday season.
A robust recovery in air cargo demand this year is being largely driven by fast rising e-commerce demand coupled with new product launches. Apple’s latest iPhone was released in November as opposed to a typical September release, resulting in serious space constraints at major China hubs.
Waiting until room frees up is not an option for most companies, and a regular need for air cargo capacity to meet space requirements of a growing customer base will be reflected in Flexport’s business model during 2018 when the company will set up a weekly freighter schedule.