eCommerce Holds the Promise of High Growth in the Coming Years
Lufthansa-Cargo, which had announced at the Transport Logistic 2023 trade show in Munich about its plans to establish an eCommerce hub at Frankfurt airport, is now making headway towards this goal.
Together with its associate logistics company Heyworld and the customs agency CB Customs Broker, the cargo carrier is expanding its e-commerce operations at Frankfurt airport.
eCommerce received a strong impetus during the Covid pandemic when a number of cargo carriers recorded a surge in their business. Recognizing this segment’s business potential, cargo carriers are establishing dedicated e-commerce operations. According to Bhat, Lufthansa Cargo will develop Frankfurt as its primary hub in this segment, and increase its capacity by adding two A321 freighters, and providing new software solutions and capacity expansion of its e-commerce hub in the Cargo City North at Frankfurt.
Indeed, at the recent Aviation Day in Frankfurt, Bhat said that Lufthansa Cargo planned to establish a “European same-day and eCommerce network”. “Frankfurt airport, he added, would become one of the “world’s most significant eCommerce hubs”.
The cargo carrier’s customs-handling agency CB Customs Broker earlier this year entered into a partnership with handling expert GEORGI Handling. Both companies are creating a new eCommerce terminal with the objective of promoting the eCommerce business in Frankfurt.
An important but complex part of Lufthansa Cargo’s strategy is resorting to customs processing of large volumes of eCommerce consignments which will be handled by CB Customs Broker; the latter has developed for this purpose special software to meet all the requirements of customs regulations and modern online business. The software solution is purportedly aimed to facilitate timely and cost-effective customs processing of large quantities of individual consignments with automation.
Uwe Glunz, the managing director of CB Customs Broker, describes his company’s new software as a “real driver” for the online business at Frankfurt. With this solution, eCommerce shipments can be processed in a simple and faster way, Glunz says. That simplifies and expedites the exchange of data and documents needed for customs processing.
The biggest chunk of Lufthansa-Cargo’s traffic is handled at Frankfurt airport; the cargo carrier, with a 4.6 billion euro turnover in 2022, also utilizes the belly capacities of the passenger aircraft of Lufthansa airline as well as associate carriers Austrian Airlines, Brussels Airlines, Eurowings Discover and SunExpress, besides using trucks.
Lufthansa Cargo says digitization plays a major role to transform its operations at Frankfurt Airport into an eCommerce hub; it opened its first “paperless lane” between Germany and Hong Kong. In July, Lufthansa Cargo launched a new initiative with its longtime partner Kuehne+Nagel to create “paperless lanes” between Europe and Asia, turning the entire process of booking and moving cargo into what is being touted as a “completely digital experience”. Digitization, the argument goes, was a success on the general cargo route from Germany to Hong Kong International Airport, opening up opportunities for further digital developments aimed at streamlining cargo operations.
Lufthansa Cargo operates over 50 weekly flights covering 14 destinations from its primary hub in Frankfurt. In June, the carrier took delivery of its third Airbus A321P2F, expanding capacity through the short-to-medium haul European freight market. A fourth A321P2F is set to join Lufthansa Cargo in September, growing its entire fleet to 15 aircraft.
eCommerce is a Promising Growth Segment in Germany
The emphasis on eCommerce is understandable: the strategists at Lufthansa Cargo have recognized the massive business potential inherent in the eCommerce segment backed by forecasts suggesting that e-Commerce traffic will post impressive growth rates in the coming years.
The eCommerce market growth in Germany and, generally, in Europe is attributed to the high digital literacy rates among consumers and businesses, supportive policies, and additional investments in digital infrastructure.
Indeed, eCcommerce is fast becoming an integral and indispensable part of the German retail framework, posting explosive levels of growth year after year. While at the beginning of the 21st century, eCommerce revenue in Germany grew from one to three million euros, by 2021 the figures were nearer to 87 billion euros and in 2022 had exceeded 90 billion euros, according to the German eCommerce and Distance Selling Trade Association (Bundesverband E-Commerce und Versandhandel - BEVH) and the German Retail Association (Handelsverband Deutschland – HDE). Germany is the world’s fifth largest market for eCommerce. The most popular category of products purchased online in Germany is electronics, with revenue of categories such as fashion and electronics expected to grow significantly.
Furthermore, the frequency with which the consumers are purchasing online is quite high with over a fifth of Germans doing so several times a month. Indeed, eCommerce has emerged as a promising segment of business for those engaged in cargo transport.
