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Air freight on steroids

Blog post   •   Jul 06, 2018 12:55 GMT

“At the end of the day you have to know exactly what you’re doing and deliver with speed and consistency.” – Lucas Kuehner, Panalpina’s global head of Air Freight, on e-commerce air freight. (Photo by Dan Hadfield, Unsplash)

As the growth of e-commerce continues to drive international air freight, Panalpina’s global head of Air Freight, Lucas Kuehner, talks e-fulfilment and “air freight on steroids.”

“It started off as a chance conversation between two Panalpina colleagues: one in Amsterdam, the other in Shenzhen,” begins Kuehner. He’s talking about e-commerce, e-fulfillment and air freight. And you can tell he is excited. “We really value and encourage forward-thinking ideas at Panalpina, and these two guys gave us something that no other third-party logistics provider currently offers – they gave us air freight on steroids.”

It’s a phrase Kuehner uses repeatedly during the next half hour. “I call it air freight on steroids because that is exactly what it is,” he says. “So, consider this: you are in e-commerce, you need to use international air freight. That’s where we come in. We offer full ULD collection, of course, and destination handling. Nothing unusual in that. But in Hong Kong and Amsterdam we now have bulk customs clearance. Bulk customs clearance,” he says it again, slowly and for emphasis. “That is absolutely unique. Nobody else does this. And then, of course, after the bulk customs clearance and pre-sorting at destination, we re-inject the goods into the supply chain for onward distribution.”

In the Netherlands

The advent of this air freight on steroids could not be better timed. With Panalpina posting record results last year for air freight, the company is very aware that the growing e-commerce industry will also positively impact its business, particularly as it is the only global player active in the Dutch cross border e-commerce market.

“Amsterdam Airport Schiphol gives us a fantastic foothold to deliver across Europe, and the bulk customs clearance together with the fact that we receive the shipments directly without going through a ground handler, allow for a quick delivery.”

This is vital within e-commerce. For the likes of Amazon and Alibaba, after their customers have clicked ‘buy’ everything after that is wasted time. While instant gratification – in the shape of immediate delivery – might not be possible, shaving time from an already-quick delivery is imperative.

And South China

E-commerce is the fastest growing sector driving global air freight volumes, and South China, where Panalpina has a dedicated Chinese-speaking, e-commerce team in place, is a key origin. “While it is difficult to put a precise number on e-commerce air freight, because it is not officially labelled as such, we have gone from zero to an estimated 20,000 tons in only two years. The actual figure is likely to be higher. We’ve managed exceptionally well to meet the expectations of big marketplaces and their suppliers, the latter being our most important e-commerce customers,” explains Kuehner. In addition to volume growth, Panalpina is focusing on expanding e-commerce transportation to other trade lanes including the transpacific route to the USA and to other European destinations.

Global peak season for e-commerce

“We have definite peaks in e-commerce, which has an impact on our air freight operations,” says Kuehner. “For example, with big dates like Cyber Monday, Black Friday and Singles’ Day all happening in November, it gets incredibly busy.” While Cyber Monday and Black Friday are traditionally US events, and Singles’ Day is thought of as a Chinese occasion, Kuehner argues that you can see these are growing into global shopping events, with the air freight volumes to prove it.

“Those peaks are welcome, of course, and they aren’t going to go away. But we also have to be mindful of our other customers. We cannot allow their operations to be affected by a tsunami of e-commerce.”

How does Panalpina manage that? “It’s quite simple,” says Kuehner, “we talk to our customers and let them know that space is going to be at a premium from November onwards, and that it is unlikely to get any quieter until February. We do all we can to communicate this, and we also pre-procure additional flights for the busiest lanes. “But if you want to guarantee space, you have to book early.”

Preparation is key for Panalpina

If November is the busy time for air freight, the months leading up to that are the busy ones for Kuehner and his global team. “Yes, now is the time to have all the planning in place,” he says. “And this market will get bigger not only because of the big existing e-commerce platforms, but others will have to follow suit too. Traditional stores are also increasingly turning to e-commerce, and to air freight.” In its classic role as a consolidator, Panalpina is also interesting for these smaller e-commerce customers.

“It’s not rocket science what we do. We own no assets – we orchestrate everything. But at the end of the day you have to know exactly what you’re doing and deliver with speed and consistency. That includes staying on top of customs and security regulations, because nothing can go wrong,” concludes Kuehner.