“Air freight continues to play a central role in the resilience of global trade flows”: Q&A with DHL CEO John Pearson

DHL CEO John Pearson

Following the launch of the 2021 DHL Global Connectedness Index, Aviation Business News speaks to DHL’s CEO John Pearson about the resilience of international air cargo, its contribution to globalisation growth, and the outlook for 2022

ABN: To what extent has international air cargo contributed to the resilience of global trade?

Pearson: Air freight has played, and continues to play, a central role in the resilience of global trade flows – both directly and indirectly.

Indirectly, as air cargo was and still is the preferred transport mode when it comes to transporting medical equipment, medicines, pharmaceuticals, PPE and especially Covid-19 vaccines in the pandemic.

Directly, as capacity along all transport modes remains tight. To balance this, tight capacity multimodal solutions – with air freight as an important element in a well-orchestrated mix – play a crucial role. However air freight, especially with regard to ocean freight, obviously can’t absorb all peaks.

How have vaccine rollouts and the relaxation of border restrictions affected e-commerce habits throughout 2021? And what effect has it had on the demand for international trade and air cargo?

The impact was rather low, in some cases surprisingly. During the onset of the pandemic, consumers were forced to turn to e-commerce, and this resulted in the e-commerce boom we have spoken about before where we saw three years of growth happening in a few months.

Click to view the 2021 DHL Global Connectedness Index

And overall cross-border e-commerce was already increasing, and keeps increasing. Cross-border e-commerce is still growing with twice the rate of domestic e-commerce. We did not see a specific impact of the relaxation of border restriction when it comes to the e-commerce habits, and cross border e-commerce was on the rise and will stay on the rise.

How do you anticipate e-commerce habits will change heading into 2022 – and how will this impact air cargo?

E-commerce will continue to grow and the air cargo space remains impacted anyway already by the pandemic. We don’t see specific e-commerce habits impacting air cargo in general, besides the further growth in B2B e-commerce, via which more orders will become suitable for air transport and express deliveries.

As the pandemic early on has shown, lockdown measures have significant knock-on effects both up and downstream into other areas. And right now, the Omicron variant is yet another test of resilience for already-stressed supply chains, highlighting that the crisis is not yet over.

You describe B2B commerce as a ‘key trend’ going forward. What are the drivers behind the global demand for B2B trade and how will the market meet demand?

B2B is back as we would like to say it, and this is partially driven by the growth in e-commerce. How the market will meet demand is a bigger question – but what we do see is that with the future growth of B2B e-commerce, there are increased needs for fast cross-border shipping.

The B2B world is undergoing a period of intense transformation. Traditional methods of B2B operations – from sales to customer interactions; from fulfilment to order delivery – are changing rapidly.

In a white paper we released earlier this year, this trend was further explained. The study predicts strong growth for the B2B e-commerce market in the coming years: by 2025, 80 per cent of all B2B sales interactions between suppliers and professional buyers will take place in digital channels. The impact of the Covid-19 pandemic on the pace of digitalisation and the purchasing behaviours of technology-savvy millennials, who are now of an age to be the professional B2B decision-makers, are the main drivers of this global e-commerce growth.

You mention that there are ‘large untapped opportunities for countries and companies’ – how do you see this developing as we head into 2022?

Connecting to international flows can accelerate growth for both countries and companies, and this is especially relevant as many are continuing to struggle with rebounding from the crisis. The outlook is strongest, currently, for international trade and investment. International flows of people, on the other hand, continue to face a slow and uncertain recovery, weighing in particular on the tourism sector and on economies that depend heavily on international tourism.

Do you see air cargo as being forever changed as a result of the Covid-19 crisis?

Although the airline industry is still far from normal after almost two years of the Covid-19 pandemic, especially in terms of intercontinental travel, we don’t expect any significant changes in the air freight industry. Rather, intercontinental travel and the global economy are expected to rebound as international vaccination campaigns help to further contain the virus. A far greater driver of change will be the sustainability efforts of the public and private sectors to stop global warming, a change we not only welcome, but are actively driving with our sustainability roadmap and investment in alternative fuels and technologies.

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