Atlas Air Worldwide Holdings (AAWW) is pivoting towards e-commerce and express shipments to take advantage of high-growth markets, said CEO William Flynn at the company\u2019s investor meeting yesterday. And while Atlas already has a reputation as one of the more dynamic cargo airlines, the announcement accelerates its move away from heavy freight and towards more disruptive cargo and shipping modes.
\n\u201cWe are moving away from heavy freight and into the integrator, express and e-commerce market,\u201d Flynn explained. \u201cWe are becoming a different company.\u201d
\nThe new strategy reflects market trends. According to IATA, international freight tonne kilometers (FTKs) grew by only 2.4 percent in in 2015, year-over-year. During the same time period, a separate Bank of America and Merrill Lynch study estimated that international express grew by 4.9 percent while e-commerce surged by 20.4 percent.
\nFlynn\u2019s sentiments underscore a strategy that was embodied in May\u2019s 20-freighter leasing \u00a0agreement with e-commerce giant Amazon.com. The company has bolstered its presence in the express market in other ways, as well. Atlas has inked deals with DHL, UPS, FedEx, China Post and other express firms. Under current market conditions, Flynn explained, it made sense for Atlas to move, \u201cmore deeply into the integrator express market and now into e-commerce.\u201d
\nThe international express market has already proven its dynamism with a 6.3 percent compound annual growth rate (CAGR) since 2011 according to Atlas. International FTKs posted a paltry 1.7 percent CAGR over the same time, for comparison. Atlas can justify targeting e-commerce based on its historical 24.8 percent CAGR since 2011, and its projected 22.3 percent CAGR through 2018.
\nExecutive vice president and chief commercial officer Michael Steen pointed out that e-commerce disruption of traditional supply chains was forcing the air cargo sector to respond, and fast. Steen explained that with customers now ordering directly from producers and distribution centers, delivery times from producers to customers were down more than 60 percent to 10 days compared with around 30 days under the old model.
\nSteen also pointed to anticipated growth in countries such as India, where e-commerce is \u201cforecast to grow to US$220 billion by 2025, with 35 percent CAGR over the next 10 years,\u201d adding that \u201cthe market is changing.\u201d
\nSource: aircargoworld<\/p>\n","protected":false},"excerpt":{"rendered":"