Published On : 16 Apr 2018
E-commerce is rapidly reshaping the entire logistics industry. In the present, globally connected world, there is an increasing demand for swift transportation and ease of access of goods over the globe. While ship and land cargo are still considered to be favorable options, the transport of goods by air is hitherto being considered as the speediest and smoothest way of transportation, as it enables the tracing and tracking of shipments, along with providing live status monitoring of the shipment, right from departure to arrivals.
In present times, air freight services as a mode of transport is preferred by companies investing in products such as perishables, valuables and chemicals. While not as cost-effective as sea or land transportation, air freight services as a mode of transportation, considerably diminish the time of delivery.
As the demand for merchandise and consumer goods is expected to increase considerably in newly industrialized economies, and this demand will continue to grow across developed countries, boosting demand for air freight logistics. It is expected that freight service providers will also increase the average fare for their services, which will add value to sales.
E-Commerce to Provide Impetus to Rapid Growth of Air Freight Service Market
A primary driver of the air freight service market is the perpetual expansion in e-commerce activities over the globe. In the e-commerce industry, as vendors have to ship orders faster, the demand for air cargo has gone up substantially. As geographical borders do not restrict online retailers, shipping products by air will result in quicker deliveries. The ability of air transportation to convey goods from one location to another in a much shorter duration of time will is expected to propel the popularity of air freight services among end users over the coming years.
A recent case of e-commerce making it big with help from air freight services is the e-commerce giant Amazon. Ten years ago, the company was known for shipping books and other kinds of media. Then it created an additional business by selling its spare computing capacity and eventually became the leading provider of computing power in the cloud, with a market share bigger than its nearest three competitors combined.
Now Amazon is making moves in logistics. Three years ago, it announced a new venture called Global Supply Chain by Amazon, providing a “one click-ship for seamless international trade and shipping.” Since then, the company has continued to expand its warehousing capabilities a million square feet at a time.
Need for Attention towards War-Torn Areas, Calamity Hit Regions to Boost Demand
Government regulation is the biggest factor behind the industry’s fragmentation because regulation limits the takeover of domestic airlines by foreign airlines. Airlines attempt to bypass this limitation through code sharing and alliances. Concentration is also low due to the high costs associated with operating aircraft and the capital required for technological advances.
Additional factors boosting the market are the need for immediate medical attention in several areas that are affected by natural calamities and war-torn areas coupled with the demand for time-sensitive materials belonging to the healthcare sector.
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Faster growth in the global air freight services marketed is expected in the forthcoming years, mainly due to expansion in newly industrialized economies. Manufacturing output in China and other Asian countries is anticipated to increase during the period, which will contribute to growth in freight volume transported in the years to come.
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