Air cargo still weak, but with some 'bright spots for airlines to focus on'
The air cargo market continues to look weak – but economists, forwarders and airlines are ...
Flexport’s deal to takeover Shopify Logistics and Deliverr is not a pivot from its original strategy, the company insisted at Transport Logistic in Munich last week.
“The number-one thing is that our customers want this,” said Sanne Manders, president air & ocean. “Especially when you look at the fast-growing e-commerce business.
“About 20% of retail is e-commerce, but the potential is much bigger. There is now the potential for companies to streamline factory-to-consumer [delivery].”
He said it was not just about the benefits to SMEs, adding: “It’s also for large companies. If we create an end-to-end chain, they will use it.”
The idea is to bypass distribution centres by understanding the demand, he explained. “We could take out multiple points, reducing labour.”
While most forwarders eschew the idea of final-mile (“good luck with that”, said one road specialist forwarder), Mr Manders pointed out that Flexport would partner with a local delivery company; or companies – it plans to role out the product globally.
“Final-mile economics are about route density and stops, and delivering multiple packages. You need a lot of scale, but you don’t need your own vans. There are a lot of local skilled delivery companies and solutions already. You just feed into it and keep asset-light.”
He said the move “is a natural extension to what we were already doing” and added: “It’s different economics, yes, but we can take out inefficiencies.”
Flexport insists the move into e=commerce is not a new idea pushed by former Amazon boss now Flexport CEO Dave Clark.
“[The idea] has always been there, it’s not a distraction, or a departure. Customers don’t want to build out their own logistics, they want to feed into a platform. They won’t get the scale by themselves.
“The mission has always been to make global trade easy for everyone.”
The idea is not limited to the US, although that is where the scheme will first be rolled out.
“Everything we do is global,” said Mr Manders. “The software of Deliverr will work very well in Europe too, although short-term integration will be North America.
“It’ll be easier and quicker in North America, but it is coming to Europe. Lots of European brands also have entities in the US.”
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