Emirates, the world’s biggest long-haul airline, started an online shopping package delivery service between the US and the UAE to capitalise on e-commerce growth and cope with a decline in global air freight.
Emirates SkyCargo, the largest international air cargo operator globally, launched Emirates Delivers, a service that will allow UAE residents and businesses who shop online at US stores to get parcels delivered to their doorstep within three to five working days, Nabil Sultan, Emirates' divisional senior vice president for cargo, said on Tuesday.
“With the decline in general air cargo, how do you compensate for that drop with the new vertical of e-commerce? Growth of e-commerce demand requires a new way of delivery,” Mr Sultan said. “It’s a no-brainer.”
E-commerce transactions in the UAE are forecast to reach $16 billion (Dh59bn) in 2019 and grow 23 per cent annually between 2018 and 2022, according to a joint study by Dubai Economy and global payments company Visa. Emirates is tapping into the regional boom in e-commerce to help fill the cargo belly of its mammoth fleet of passenger aircraft and its dedicated freighters.
The move comes amid a global slowdown in general air cargo volumes spurred by intensifying trade tensions, uncertainty around Britain’s exit from the European Union and growing geopolitical tension.
Demand for air freight contracted 3.9 per cent in August year-on-year, marking the 10th consecutive month of decline in freight volumes, the International Air Transport Association said this month. This is the longest period of decline since the global financial crisis in 2008 as the US-China trade spat weighs heavily on the industry.
Emirates began testing its e-commerce delivery service on 4,000 customers a year ago as part of its efforts to diversify its offering.
Emirates Delivers, which went live online on October 15, will allow customers to sign up for free on its website, get a physical address in the US and choose to either ship their purchases immediately or store them for free over a period of up to 30 days as they continue shopping.
Prices start at Dh47 per kilo and the parcels can be shipped to a home or an office address in the UAE.
Emirates Delivers expects to handle 1,000 to 5,000 packages a day using a fleet of 15 vans, according to Dennis Lister, vice president of cargo commercial development at Emirates SkyCargo. It is aiming for delivery within 48 hours as volumes grow.
Emirates SkyCargo plans to expand the service in the next six months to add more originating destinations, Mr Sultan said.
“What we launched today is the tip of the iceberg,” he added. “It’s a big-ticket item for us in the future.”
Emirates SkyCargo has belly-hold capacity in the airline’s fleet of 265 wide-body aircraft, including 12 freighters.
The airline operates 13 routes to the US, with cargo capacity on more than 100 flights weekly including scheduled dedicated freighter services to Columbus, Chicago, Houston and New York.
Middle East airlines' freight volumes decreased 6.7 per cent in August compared to the same month last year, marking the sharpest drop in freight demand among all regions, according to Iata. Escalating trade tensions, slowing global trade and airline restructuring have affected the region's performance since the fourth quarter of 2018, it said.
