As e-commerce continues its meteoric ascent, small and mid-sized shippers find themselves increasingly courted by players who traditionally did not have time for them. Large multinational forwarders as well as airlines are trying to get their traffic with offerings of door-to-door solutions via digital platforms that promise end-to-end visibility.
From the large forwarder side, the latest foray came from Kuehne + Nagel, which unveiled an integrated, multimodal door-to-door solution in early June. KN ControlTowerDynamic was devised for SME clients, particularly players in the industrial, consumer and high-tech industries. According to the logistics behemoth, it is a scalable supply chain management solution with faster time-to-value and a “revolutionary” pricing model.
“Small and medium-sized enterprises are of special importance for Kuehne + Nagel. They face the same challenges as the big corporations in terms of needs of advanced end-to-end visibility solutions and harmonized reporting and analytics. KN ControlTowerDynamic is the first product in the logistics market that is specifically designed for them,” said Gianfranco Sgro, a member of the managing board of Kuehne + Nagel International.
Two days after the launch of the SME offering, K+N strengthened its capabilities on the final mile through a strategic partnership with Zebraxx, an application service provider of logistics solutions. Through the alliance the logistics firm will be able to offer additional methods for collecting and sharing delivery information, such as real-time vehicle location, photographic evidence of the state of consignments, IoT validation or electronic proof of delivery – independent from systems and carriers used. The tie-up will also bring enhanced functionality on mobile devices.
“We are seeing an increasing need for improved visibility solutions to service our customers. As our environment becomes more and more digital, customers are demanding greater flexibility and options in the solutions we can offer them and all at a lower cost,” said Sgro.
SME shippers may not offer the volumes of their larger competitors, but they tend to bring juicier margins, as they typically lack the leverage to negotiate significant discounts. Historically, large forwarders have not focused on this segment, though, preferring to concentrate their sales efforts on large corporate clients. They do not have the manpower in their sales force to service small shippers, noted Rizwan Kermalli, president and founder of Canada Worldwide, which markets the capacity of the large express operators to SME shippers and importers in Canada.
The digitization of key elements of forwarding services offers multinational logistics giants an avenue to sell to SME shippers without having to field sales staff to service them. Not surprisingly, smaller logistics providers like Canada Worldwide argue that SME shippers also need service beyond what is offered on digital platforms.
Airlines have been buoyed by the volumes fed into their networks by e-commerce, although the yields have not been strong. Some are trying to up the ante with forays to serve online merchants directly. Late last year, IAG started a service moving shipments door-to-door, initially from the US to the UK. The first and final-mile legs are covered by partners.
Zenda offers an electronic price enquiry and booking portal for end-to-end transportation with the express objective of providing shippers with a service comparable with the offerings of express companies, but at a cost that allows lower-value goods to be shipped by air to international destinations. Transit times are within five working days.
Initially the platform hosts the carriers in the IAG group, but other airlines are invited to join in, IAG has stressed.
Lately two Middle Eastern heavyweights have joined the push for e-commerce business, both in partnerships with Chinese e-commerce giants.
Alibaba logistics subsidiary Cainiao signed an MoU with Emirates SkyCargo in June to develop international e-commerce traffic over the carrier’s Dubai hub.
“As a key gateway that links Asia and Europe, Dubai is well positioned to help us achieve our goal of 72-hour global delivery. The MoU with Emirates SkyCargo is another milestone to reach this goal,” said Guan Xiaodong, general manager of Cainiao Global Business.
Turkish Airlines thinks that its Istanbul base, where a new airport is due to open at the end of October, offers more promise. It has formed a joint venture with ZTO Express and PAL Air for a door-to-door e-commerce logistics service. Expectations are high. According to the airline, the Global Ekspres venture will generate more than US$2 billion in revenue by 2023.
The venture comes on the heels of ZTO forging closer ties with Cainiao. In May investors led by Cainiao and parent Alibaba paid US$1.38 billion for a 10% stake in ZTO, which in turn invested some US$168 million in Cainiao Post the following month.
By Ian Putzger
Air Freight Correspondent | Toronto
