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Impact of E-Commerce Growth on Freight Forwarders

Article submitted by: FIATA – TIACA Strategic Partner

Written by: Stephane Graber, Director General, FIATA

E-commerce has continued its exponential growth over the last five years and has proven to be a business model that drives business-to-consumer (B2C) activity, which is significantly different to the traditional airfreight forwarder concept of business-to-business (B2B). It has seen vertical integration by those positioned as integrators where controlled end-to-end pickup and delivery are integral service delivery items. However, it should be noted that these aspects are just answering to market demands timeliness of delivery, track and trace, and cost competitiveness. These are service deliverables that are being implemented through advanced supply chain and logistics processes to meet increasing demands.

According to figures from the United Nations Conference on Trade and Development (UNCTAD), in 2018, 1.45 billion people shopped online globally (up 9% from 2017) and e-commerce sales reached US$25.6 trillion (up 8% from 2017). B2B was valued at US$21 trillion (representing 83% of all e-commerce), while B2C e-commerce was valued at US$4.4 trillion (up 16% from 2017). The United States, China and the United Kingdom dominated sales to consumers.[1]

Fast forward to 2020, with the world in lockdown due to COVID-19, e-commerce sales have, and continue to soar as consumers maintain and even increase routine behaviour online. As such, many businesses have adapted and provide integrated digital solutions to remain viable. The pandemic has accelerated the digital transformation in logistics and the digitalization of the supply chain has never been more evident.

Digital transactions are taking trade to a different dimension and logistics with it. Issues such as government fiscal leakage, community safety and security, intellectual property, and consumer protection (physical and financial) are now seen, in the European Union and the United States, as items that need to be addressed in the global movement and border clearance of e-commerce. Other economies watch with interest as to changes on the parity, equality and alignment of traditional cargo process management.

FIATA, as the global voice of freight logistics, recognizes the value in e-commerce and encourages its members to grow new business alongside the growth of the trading community. For the future of logistics and trade to be successful, it is critical to have access to sophisticated logistics networks backed by investment in infrastructure and improved facilitation.

That’s why FIATA’s digital strategy focuses on transitioning towards seamless data exchange across the industry. E-commerce requires customer data to constantly change hands between stakeholders in the supply chain, with logistics providers bearing greater risks from the lack of transparency and visibility. FIATA is committed to establishing a transparent trading community by creating a network of trust which will allow freight forwarders to exchange authenticated and secured data, enforcing the usage of standards in paperless trade (such as the FIATA e-Bill of Lading), and facilitating interoperability between systems to ensure freight forwarders stay operationally up to date with the new business models.

FIATA supports the WTO Trade Facilitation Agreement and the key aspect of economies activating, from the Agreement, National Trade Facilitation Committees as being integral to trade related initiatives. FIATA continues to contribute to policy discussions on e-commerce suited solutions, promoting among its members the impact of investing in logistics infrastructure and facilitating customs clearance and border clearance procedures.