Dec 2015

E-commerce: threat or opportunity?

By 2020, China is expected to emerge as the largest online B2B market.

We are witnessing an e-commerce revolution that is changing the way the world shops and impacting the way goods move to market. But is e-commerce a paradigm shift, or just another fad? Where are the dollars being made in the e-commerce supply chain, and what will be airfreight’s share? Above all, is e-commerce a threat or an opportunity for the airfreight industry?

It’s easy to see why e-commerce is booming: buyers can see what’s on offer, check prices and availability, buy and have their order delivered within hours. And it’s not just consumers: businesses increasingly buy online. China is already the world’s largest e-commerce market. The growing use of smartphones and tablets, the greater range of suppliers and goods, the establishment of secure payment methods, and a desire for genuine, trustworthy sources, are all driving growth.

The next stage is already happening: overseas sellers are looking for ways to rationalise logistics and save money.

Shipping in bulk, fulfilment nearer market

One obvious measure is to reduce traditional reliance on high-cost integrators for long-haul transport, ship in greater bulk, and move fulfilment nearer to market. The big logistics players are already active, increasing their presence in China to meet their multi-national big brand customers’ demands at origin. More Regional Distribution Centres (RDCs) will open in China, so that integrators’ roles are likely to shift to order fulfillment near to final destination, cooperating with local providers to effect deliveries to customers.

Surveys of online retailers reveal that logistics actually derives a larger share of the finished price than manufacturing! But, if the airfreight industry is to grab this new business potential, the seller and buyer will expect us to work for it. The integrators set the bar high, with guaranteed delivery times and total visibility over the location of goods; to compete, we must collaborate to create a ‘product’ that combines speed, economy and visibility.

This means more sophisticated, joined up information and management systems to eliminate delays through data replication errors and manual processing, and provide greater visibility for the end customer. There are physical measures that can also be taken. For example, truck waiting times have been reduced at Hactl and the collection of imports has been streamlined. Hactl’s express zone is designated for collaboration with its carrier customers who want to offer express products.

Hactl’s value-added logistics arm, Hacis, recently launched its latest SuperLink China Direct depot, in Nansha – specifically targeting cross-border e-commerce. Nansha is in a new Free Trade Zone, adjacent to the port, and on a growing fast road network. Hacis’ facility sits within a designated e-commerce zone, which will house future e-commerce fulfilment centres. It is integrated with Hacis’ sophisticated warehouse management, road management and Customs systems, which is fully-bonded with full-time Customs presence on site.

The fleet - certified by both Customs in Hong Kong and China - is equipped with approved Customs electronic locks which eliminate inspection at the border, shortening overall transit time. And commodities such as infant formula and “strategic” products are granted licensing exemption.

To compete, we must collaborate to create a ‘product’ that combines speed, economy and visibility.

Carriers who partner with Hactl to gear up for e-commerce will be able to use their capacity more efficiently, as e-commerce re-balances export and import volumes; they should also see improved yields and increased revenues.

Hong Kong’s winning proposition for e-commerce

Add this to the benefits of Hong Kong’s strategic location and unparalleled global connections, wide choice of forwarders and logistics service providers, reputation as a tried and trusted gateway to China, excellent (and improving) hinterland connectivity, Hong Kong’s modern Customs system and procedures, and Hong Kong’s universal bi-linguality. It’s a winning combination.

Carriers who partner with Hactl to gear up for e-commerce will be able to use their capacity more efficiently, as e-commerce re-balances export and import volumes; they should also see improved yields and increased revenues. Forwarders should meanwhile see additional volume business from shippers who could handle initial small volumes themselves, but cannot now cope. They’ll also have the opportunity to engage in value-adding activities.

That’s why, at Hactl and Hacis, we see e-commerce not as a threat, but as a huge opportunity for the airfreight industry . . . and for us.

E-commerce: threat or opportunity?

By 2020, China is expected to emerge as the largest online B2B market.

Shipping in bulk, fulfilment nearer market

Hong Kong’s winning proposition for e-commerce

More Stories