E-commerce drives shippers to add their own air cargo networks: Atlas
THE executive vice president and chief commercial officer of Atlas Air Worldwide, Michael Steen, says that shippers are expected to increasingly create their own air cargo networks with the aim of controlling their own supply chains
THE executive vice president and chief commercial officer of Atlas Air Worldwide, Michael Steen, says that shippers are expected to increasingly create their own air cargo networks with the aim of controlling their own supply chains.
Speaking at the recent Air Cargo Europe event, he said that the rise of e-commerce meant that shippers were looking to secure access to transport capacity throughout the year.
Atlas Air has itself benefitted from this trend and recently announced a B747-400F charter programme with a high-tech company, while it also operates over 20 aircraft for e-commerce company Amazon. An Atlas investor presentation on its website also names Inditex as another shipper customer.
Mr Steen explained: 'It is a matter of making sure that [shippers] have control of their supply chain so they can move products from A to B.
'It is happening in many industry segments, and it applies to shippers that want to have access to capacity at any given time.'
However, the rise of e-commerce and associated special sales events have created spikes throughout the year, while products are also now sold through several channels, not just shops on the high street.
Customers are also demanding faster delivery of goods, which can be better achieved through a dedicated network.
Mr Steen says that other areas of the air cargo sector are also benefitting from the trend, reports London's Air Cargo News.
'We are seeing increasing demand from shippers and our customers are seeing that as well, for example in combination with one of our freight forwarding intermediaries, for whom we are also flying aircraft, like Panalpina.
'We are well spread and diversified when it comes to that, so if we see adjustments or changes in the market-place and demand in a certain area, we can pivot accordingly.'
On the traditional air cargo market, Mr Steen says that demand has slowed this year, but Atlas is sheltered to an extent because it also caters for the e-commerce and express industries, which continue to grow.
'The other interesting question is, of course, what if there is no trade agreement between the US and China, but consumption continues to increase, what will happen to production?
'Is manufacturing going to be moved from China to other places in Southeast Asia? That would not be the end of the world for Atlas because it would present a tremendous opportunity - we can move our assets to where our customers take demand.
'So with our diversified strategy over the different product lines and our five fleet types [B737, B757, B767, B777, B747], I think that we are in a good position to navigate through any downturn in the market as well as capitalise on upturns,' Mr Steen added.
He pointed out that today, e-commerce has a penetration rate of around 12 per cent globally, including streaming media, leaving plenty of room for growth in this sector.
Atlas has benefitted from demand for charter services during the peak season over the last couple of years.
Mr Steen said that charter demand has been good so far this year through its ongoing activities for sports like Formula 1 and Moto GP, while it also has deals covering the peak season with express companies FedEx and UPS to supply them with extra capacity.
'I think general cargo wise we are going to see a solid peak,' he added. 'How it plays out is going to be dependent on what happens here this summer that will force the market to go one way or the other.'