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E-commerce survey highlights the haves and the have-nots

Not everybody is able to feast on the e-commerce pie, though. Whilst some world regions are clearly benefiting, such as in the Asia-Pacific, where the majority of transactions are currently taking place, others are falling behind, the UNCTAD report shows

MORE investment in transportation infrastructure — especially at airports and border crossings across the world — are critical for the cost-effective and timely distribution of inbound and outbound e-commerce shipments, a report from the United Nations Conference on Trade and Development (UNCTAD) reveals.

The report entitled: COVID-19 and E-Commerce: A Global Review, conducted by UNCTAD and its ‘eTrade for all initiative’ member countries, shows that whilst e-commerce’s share of global retail trade rose by about 17 per cent last year, inefficient transport and trade logistics, barriers which reduce the cost benefits and speed advantages that digital transactions offer e-merchants, have been starkly accentuated by the global health pandemic, particularly for small consignments from micro, small and medium enterprises (MSMEs), writes Thelma Etim.

It emphasises that the outbreak of Coronavirus has clearly disrupted global supply chains and, at the same time, accentuated weaknesses in infrastructure for the delivery of parcels. Standardised paperless documentation formats and digital single-window processes would “smooth the flow of goods along transport corridors and through border crossings,” it points out.

In an article published on news website Axios.com, Susan Lund, a partner at McKinsey & Company’s business and economics Global Institute arm, reveals that the flood of small parcels is currently “overwhelming Customs inspectors” — because most existing trade agreements were drawn up in the pre-digital era, she observes. Lund goes on to predict that e-commerce sales will be worth US$1trillion by next year.

“Consumer-facing e-commerce has become a $3.5trillion global market, and some $700billion of those purchases occur across borders, but there are almost no existing international rules in place for it,” she stresses. “Many countries require that data generated within their borders must be stored on servers physically located within that country. This is a point of contention for global internet traffic and transactions, since it has forced companies to build multiple foreign data,” Lund writes.

Her findings point to research conducted by the International Air Transport Association (IATA), which also notes that the air cargo industry must adapt to e-tailers’ needs. “Dedicated products and a new focus on processes are critical if airlines want to capture e-commerce volumes. Industry stakeholders must prioritise the digitalisation of their air cargo operations,” the association says. “This will be the main game-changer if they are going to keep up with online retailers,” it adds.

IATA’s key transformation strategies for carriers to capture e-commerce volumes, include reducing processing times by optimising their air, border and Customs operations processes — and forensically re-analysing how they handle cargo and mail shipments.

Not everybody is able to feast on the e-commerce pie, though. Whilst some world regions are clearly benefiting, such as in the Asia-Pacific, where the majority of transactions are currently taking place, others are falling behind, the UNCTAD report shows. The eMarketer’s 2020 Global E-Commerce Report estimates that 62 per cent of global retail e-commerce transactions by value took place in that region in 2020, with North America and western Europe responsible for the bulk of the remainder. According to eMarketer’s research, Latin America, the Middle East and Africa together, accounted for just three per cent of total e-trade.

This overall, almost exponential growth corroborates US plane-maker Boeing’s latest biennial World Air Cargo Forecast,which last year revealed there will be a demand for 2,430 freighters over the next two decades, including 930 new-production models and 1,500 units converted from passenger aircraft, much of it fuelled by e-commerce shipments.

China is clearly out in front. Its online share of retail sales increased from 19.4 per cent to 24.6 per cent between August 2019 and August 2020 and IATA predicts the People’s Republic will produce US$2.779 trillion in e-commerce sales this year — 56.8 per cent of the global total.

Elsewhere, Kazakhstan’s share of online retail sales rose from five per cent in 2019 to 9.4 per cent last year. Thailand experienced a remarkable 60 per cent hike in downloads of shopping apps in just a single week last March.

Across many of the world’s least developed countries, consumers and businesses have not been able to capitalise on the pandemic-induced e-commerce opportunities due to a number of persistent barriers, which include costly broadband, over-reliance on cash transactions, lack of consumers’ trust, poor digital skills among the population and limited governments attention to the market segment, says UNCTAD.

Isabelle Durant, acting secretary-general of UNCTAD, observes that businesses and consumers that were able to ‘go digital’ have helped mitigate the economic downturn caused by the pandemic. “But they have also sped up a digital transition that will have lasting impacts on our societies and daily lives — for which not everyone is prepared,” she points out. “Developing countries should not only be consumers but also active players and thus producers of the digital economy,” Durant insists.

Shamika N Sirimanne, UNCTAD’s technology and logistics director, warns that countries which harness the potential of e-commerce will in the future be better placed to benefit from global markets for their goods and services in this digitalising economy, “while those that fail to do so risk falling behind even further,” she argues.

One of the challenges, according to the UNCTAD report, is that the pandemic has mostly benefited the world’s leading digital platforms. “Many solutions being used for e-commerce, teleworking and cloud computing are provided by a relatively small number of large companies, based mainly in China and the United States,” it underscores.

Smaller players may have gained a deeper foothold, but their market presence remains dwarfed by the digital giants — “[a situation] which could entrench their predominant role during the pandemic,” the report notes.

Torbjörn Fredriksson, UNCTAD’s digital economy head, argues that the risk is that the huge digital divides that already existed between and within countries will only worsen in the wake of the pandemic. “The result will be even deeper inequalities that would threaten to de-rail progress on the UN Sustainable Development Goals,” he concludes.

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Originally published at https://aircargoeye.com on March 21, 2021.

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Thelma Etim

Thelma Etim

I am the editor of air cargo industry news website aircargoeye.com, an alternative news and comment outlet for the global airfreight business.