WGA's Role in E-Commerce Accelerates Growth
The surge in e-commerce has brought about radical changes in customer expectations which now require speedy delivery both domestically and internationally. The result has been that e-commerce is diverting cargo from slower surface modes of transportation to air, with air cargo becoming a significantly more crucial component of the logistics infrastructure. This applies to international trans-border transportation where a 1% shift from surface/ship to air would boost air demand by 100% (since only 1% of world trade tonnage is carried by air cargo, per the Boeing Company). U.S. domestic transportation has been similarly affected as shipments shift from truck and rail to air.
To support the surging e-commerce demand, we have increased our Trans Pacific frequencies between Asia and the U.S. by 50% in 2019 as compared with 2018, and expanded our operations within the U.S. from primarily peak season to year-round flying to destinations throughout the U.S. As of this month we have flown to 350 airports in 130 countries on six continents, including 115 airports in the U.S.
As a next generation air cargo airline platform, Western Global Airlines is already set up to support e-commerce in terms of its economics and service. Our fleet is particularly well suited to satisfy the needs of e-commerce. WGA’s highly upgraded and efficient extensive fleet of MD-11 freighters equipped with GE engines offer superior economics to the 767’s for larger e-commerce lanes because they can carry 70% more payload at only slightly higher overall cost, which is significant as e-commerce grows and seeks lower unit costs. Because of its size and cost advantages, the MD-11 is also the optimal freighter for many international markets. Being almost the size of the 777F but a fraction of the cost, it can deliver for e-commerce with much better economics. Similarly, our 747-400 freighters excel and are highly desirable for e-commerce on Trans Pacific routes, offering our long term customers competitive pricing and unparalleled service commitment.
E-commerce has grown by at least 20% a year over the last three years with growth expected to accelerate in the future. The goal of e-commerce giants is to achieve 72-hour or less global delivery, and 24-hour or less domestic delivery. The explosive growth of e-commerce will continue to drive air cargo demand in the future and require more and more dedicated air cargo service. Having proven our capabilities with the world’s leading express companies, integrators, forwarders and airlines, WGA is well positioned to support and grow the e-commerce market in addition to our other business segments.