CFS 2018: More e-commerce changes expected in supply chain dynamics, infrastructure

SAN DIEGO – It’s no secret that Amazon has been a major catalyst in the move toward e-commerce, causing logistics companies to rethink supply chains in the 21st century climate. However, it was not until the development of Amazon’s own logistics services branch, Amazon Fulfillment, that the Seattle-based e-tail giant become a competitor for all companies throughout the supply chain – not just other e-tailers and retailers.

These and many other recent changes to supply chain dynamics brought about by e-commerce were discussed in detail during yesterday’s Cargo Facts Symposium discussion, titled “How much more instant gratification will come by e-commerce?” which was moderated by Alan Hedge, senior director of Cargo Facts Consulting.

Speaker Mike Berger, chief commercial officer of Air Transport Services Group (ATSG), said that Amazon now accounts for about 25 percent of its business. “Amazon has made us a much better player in the e-commerce space,” he said, echoing a sentiment felt by logistics companies of the age of e-commerce.

“Amazon is not just a disruptor on the carrier side, they’re a disruptor in the market, period,” said fellow panelist John Hill, president and chief commercial officer of Pilot Freight Services. In Hill’s experience, having the name “Amazon” on its client list evokes a mixed reaction from its other clients; they are “happy we do business with Amazon because they have to know they’re high quality,” but also often consider Amazon a major competitor.

When asked how markets could transform in the face of e-commerce, panelist Michael Piza, senior vice president of APEX Logistics, explained how the popularity of cargo hubs could evolve in China, naming centrally located city Wuhan an emerging gateway. APEX has added a six-times-weekly charter out of the hub.

“Shanghai and some of the other locations have had the challenges … in terms of the passenger traffic and flights not taking off on time,” Piza continued. “I think you’re going to see some further developments in Wuhan … the government is willing to support those markets,” he said, and added that there may be a shift away “from some of those larger airports like Shanghai and Hong Kong.”

Speaker Steven Verhasselt, vice president, commercial, at Liège Airport – an emerging cargo hub in the congested Western European market – said that, looking purely at revenue, passenger flights are more lucrative for the airport, but that investments in cargo capacity is a prevalent part of its strategy.

“An e-commerce charter just takes more space to handle,” Verhasselt added. “With the growth we’ve had over the last two years, we’ve come to the conclusion our handling facilities just cannot cope with it,” he said.

The airport expanded its customs operations into nearby Liège Logistics Park to accommodate the influx of cargo traffic, but Verhasselt said that real, long-term improvements will come down to advancements in technology. “For us, the cloud is going to be the way to move things faster,” he said. “The way we see it, this cloud technology is as important as another 20,000 square foot facility because it just improves the speed in which the cargo [moves].”