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New e-commerce supply chain models taking off in 2022

New e-commerce supply chain models taking off in 2022 1

By Olivier Linchet, CEO South Asia at Asendia 

It’s been over two years since we first heard the word ‘Covid’, and as 2022 dawns, ‘back to normal’ remains elusive. With a new variant raging, e-commerce retailers must continue their rollercoaster ride of Plan Bs and contingencies, working with their supply chain partners through uncertainty and delays.

2021’s sky-high shipping rates could surge even further this year, as disruption at ports and driver shortages continue to create severe bottlenecks. Analysis by Deutsche Bank predicts that average container prices could rise by 30% in 2022[1] for Maersk and Hapag-Lloyd, two of the world’s top shipping companies.

Businesses eager to control costs, maintain service levels and honour cross-border deliveries to their customers are faced with a big dilemma – adapt at speed, or die. So, what will the new e-commerce supply chain models look like, and how are logistics partners stepping up to the challenge?

New partnerships and routes

Ambitious retailers recognised years ago that international shipping is a key e-commerce growth tactic. But there is a steep learning curve when it comes to the practicalities of shipping routes, customs admin, returns management and reaching customers thousands of miles away. Because air freight and container shortages continue to affect delivery times and push up costs, some retailers with long-established partnerships with trusted suppliers are now on a desperate search for new partners who can provide any improvement to the current situation.

Logistics partners boasting international reach, strategic collaborations with last-mile providers around the world, and physical facilities positioned across multiple sites such as North America, SE Asia and Europe, are in the strongest position to win this business and provide the most reliable services.

For instance, there’s a huge amount of investment going into South Asia and the wider APAC region for warehousing space, fulfilment facilities and delivery services in anticipation of e-commerce growth across the region. Global e-commerce players and big brands are looking for routes into this market and seeking logistics partners who can bring their expansion plans to life. Key growth markets where Asendia is helping European and US retailers reach new audiences include Australia, Japan, Hong Kong, South Korea, Malaysia, India and Bangladesh, Singapore, Vietnam and Thailand.

In the post-Covid business landscape, e-commerce businesses will expect their supply chain partners to share highly-valuable knowledge of international market dynamics, local culture, delivery and payment preferences and customs regulations. Retailers also need consultancy support, to understand international shipping lanes, and access to the quickest, or safest cross-border routes, including access to highly sought-after warehouse space and fulfilment services.

Taking to the skies
While e-commerce players have relied on air freight for international parcel shipping for many years, it’s likely that competition for space will hot up, as other sectors seek alternatives to maritime shipping.

With sea ports snarled and companies scrambling for space on container ships, air freight has become an attractive option for companies needing to move goods quickly. The sector is booming as a result, with air freight prices reportedly more than double pre-pandemic levels[2], and airlines keen to cash in on the opportunity. At the Dubai Airshow in November 2021, plane manufacturers Airbus and Boeing signed deals worth tens of billions of dollars for cargo versions of their most popular jets. Willie Walsh, former chief executive of British Airways, and now director-general of the International Air Transport Association, says we should expect a “permanent shift” for airlines towards cargo.

What will be the impact on availability for e-commerce retailers? Our view at Asendia is that due to ongoing reductions in the number of passengers, and new Covid variants impacting crews, escalating demand will continue to conflict with reduced capacity in the short-term. As mentioned earlier, it will be the supply chain players with well-established connections with airlines and country-specific postal and package organisations who will secure capacity in this highly competitive arena during 2022.

We’re delighted to see that Sustainable Aviation Fuels (SAF) – a clean substitute for fossil jet fuels – are being developed rapidly in the aviation industry, to address environmental concerns currently hanging over air freight.

Massive growth in cross-border e-commerce hubs
If the impact of Covid continues to affect international parcel deliveries, we will see major growth of cross-border e-commerce hubs, where retailers can store inventory closer to their end customers.

For example, Asos.com says it’s working toward a fulfilment model in which its global warehouse network will fulfil any order from any warehouse, so stock is available ‘flexibly’ across its warehouses. With fulfilment sites in Atlanta in the US, Germany and the UK, the fashion e-tailer might ship to the Netherlands from the US, if the German warehouse doesn’t have an ordered item in stock.

Third party logistics specialists also recognise this need for strategically located hubs to support retailers and brands not commercially ready for their own global warehouse infrastructure. At Asendia we are adapting services in the APAC region and teaming with local partners to help Western brands gain a solid foothold through our Asian Desk and Singapore-based fulfilment operation.

It’s clear the retail industry is accepting this stark fact: supply chain uncertainty is the new normal. Investment in technology for data analytics and sophisticated forecasting can get you so far. But retailers with aspirations for international growth also need to work closely with knowledgeable supply chain partners who are able to build flexibility into fulfilment scheduling, and offer advice and guidance about emerging markets. E-commerce fulfilment and delivery specialists today should have a strong network of supply chain partners and collaborations so that cross-border parcel shipments are as streamlined and efficient as possible.

Winning and retaining the trust of customers in overseas markets is no easy feat. Teaming with switched-on ‘glocal’ logistics partners will be key to building meaningful relationships with these exciting new audiences.

About the author:

Olivier Linchet is CEO South Asia at Asendia, and has worked in the postal and parcel industry for 20 years holding senior management roles in Consultancy, Sales, Commercial and Business Development. After his first experience the cross-border e-Commerce in 2009 with DHL, he joined DPD Group in 2012 to become the Business Director for DPD Global Solutions. He has built innovative cross-border B2C delivery solutions to help the largest e-commerce brands expand globally including for the Asian and US markets.

https://sg.linkedin.com/in/olivier-linchet-60792028

Launched in 2012 by La Poste and Swiss Post, Asendia operates across the world, bringing together a wealth of international and local expertise, and a network that delivers to over 200 countries and territories.

[1] https://trans.info/en/research-from-deutsche-bank-forecasts-30-rise-in-shipping-rates-in-2022-261490

[2] https://www.telegraph.co.uk/business/2021/11/20/air-freight-takes-companies-try-dodge-supply-chain-pain/

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