SEKO Logistics has set up a 50,000 sq ft warehouse close to Shenzhen. Located 30 minutes from the port of Hong Kong and 45 minutes from Hong Kong International Airport, the new facility is equipped with 10 dock doors to allow a seamless flow of collections and deliveries straddling the border between Hong Kong and China. It currently serves 20 clients, a mixture of global brands and leading businesses in the Asia-Pacific region, according to the logistics firm.

The building, which can be doubled as volumes increase, is designed to handle e-commerce flows into China. It is part of SEKO’s evolving ‘e-commerce gateway’ for retail and high-tech customers targeting China’s online consumer market.

Last November the logistics firm opened another 50,000 sq ft, high security ecommerce warehouse to provide order fulfilment services as well as same-day and next-day deliveries in Hong Kong.

China’s online consumer market, forecast to see spending exceed US$1 trillion in 2017, is a huge magnet for logistics providers.

Elsewhere, the momentum of B2C e-commerce, in stark contrast to the depressed yields in general transportation as a result of overcapacity and lacklustre demand, is having the same effect. eMarketer, a market research company that focuses on digital marketing, media and commerce, predicts that on-line shopping will enjoy a compound annual growth rate of 27.4% over the coming five years. By some projections, the global B2C volume will reach US$2.26 trillion a year by 2020, fuelled by annual growth rates in the 15-20% range.

SEKO’s positioning of e-commerce distribution facilities in closer proximity to large markets is in line with an emerging trend in this segment. Horst Manner-Romberg, principal of parcel logistics research and consulting firm M-R-U, noted that increasingly online merchants are looking to locate their distribution warehouses relatively close to major urban centres, a strategy that reduces transit times for getting the goods to customers.

Retailers have begun to talk to SEKO about positioning inventory closer to markets in large urban areas, said Brian Bourke, vice president of marketing.

DHL is showing a similar strategy on the opposite side of the Pacific. The integrator opened a US$1.3 million service centre facility in Chicago in July to meet “heavy demand” for international e-commerce growth from local businesses in the state of Illinois.

The building has a footprint of 38,000 sq ft and can handle over 2,500 shipments in an hour. It is meant to handle a variety of cargo, from small parcels to pallets and containers.

It is located close to of Chicago’s Midway International Airport and supplements a larger, 80,000-square-foot facility that covers Chicago’s downtown core as well as northern Illinois.

As in SEKO’s case, the new DHL facility is part of a larger move to position the logistics provider to play a larger role in e-commerce. DHL is spending US$137 million up to 2017, adding eight distribution centres and enhancing two existing facilities in Los Angeles and Columbus, Ohio.

According to Charles Brewer, CEO of DHL eCommerce, the new investment will also expand day-definite deliveries and enhancements to support domestic and international services. “We provide the most comprehensive e-commerce platform for international trading ventures, thanks to our different divisions’ expertise along the entire supply chain, whether it is warehousing or transportation,” he said.

Cutting transit times is a key driver of these investments amid signals that delivery windows are shrinking and consumers’ expectations keep going up. Manner-Romberg finds definitions like next-day service are becoming too granular. He expects the service spectrum to unfold further in the months ahead.

This is promising news for airlines, which have been struggling with poor demand and weakening yields in the general B2B cargo arena. Amazon’s moves to secure dedicated air freight capacity indicates that air freight is going to play a larger role in e-commerce, especially in the international arena.

This has prompted concerns that airlines could bypass forwarders and deal directly with e-merchants, arguably via a platform similar to Uber. Most experts dismiss such a scenario, citing the complexity of international air freight moves. As for the airlines, for the most part their e-commerce strategy is built on mail.

“Our target customers for e-commerce are post offices who have as a key strategy targeting the e-commerce segment,” stated Mark Sutch, general manager of cargo sales and marketing at Cathay Pacific.

By Ian Putzger

Correspondent | Toronto