E-commerce-driven 3PLs ‘coping better with Covid crisis’

6/24/2020

Getting into cross-border e-commerce and fulfilment 6 or 7 years ago has enabled SEKO Logistics’ UK business to weather the COVID-19 crisis far better than many traditional freight forwarders. But a shortage of air cargo capacity has been and remains a key challenge even for a sector than has proven to be “massively resilient” throughout the pandemic, according to a senior executive at the US-headquartered company.

“COVID has proven that home delivery, click-and-collect and alternative shopping experiences are the future and we’ve benefited from that because we’re not just an end-to-end forwarder,” David Emerson, vice president, Sales and Marketing, EMEA Region, told Lloyd’s Loading List in an interview. “I’d like to say we saw it coming, and to some extent we did, but COVID has significantly accelerated what was happening anyway.

“We’re seeing customers who were just doing domestic and European e-commerce now really trying to pivot into international cross-border and fulfilment because they recognise that business is clearly moving on. We can help them scale and take advantage of the demand for alternative shopping methods globally, help them to understand where the key markets are, and give them solutions so they can service those key markets.”

Forwarder and e-fulfilment provider

SEKO serves as both a forwarder and e-fulfilment provider for cross-border e-commerce, with its core markets from the UK being to the US, Australia and New Zealand as well as Israel and Asia, for example, Hong Kong, Thailand, Malaysia and Indonesia.

Emerson said that after a strong year of ‘cross-border’ growth in 2019, fears that volumes would ‘fall off a cliff’ with the outbreak of the coronavirus have not materialised to the extent many predicted. But while demand has held up, accessing sufficient cargo capacity, at the right price, has been the main issue during the pandemic.

“Matching demand with supply has been extremely tough and companies have needed to be creative in their planning with customers, while also relying on the support of airline partners,” he said. “There’s certainly been a lot more communication than there normally would have been pre-COVID 19.”

Understandably, the swathe of belly capacity that has come out of the market, driving up rates, has put some customers off shipping cross-border in the short-term in the face of weekly rates negotiations and price fluctuations.

“For example, to Australia, it was a case of sounding out customers on whether they were in or out at a certain rate. Some of them were saying, ‘we’ll ship the goods to you, we’ll bring it down to the SEKO gateway at Heathrow, but don’t put it on a plane until we press the ‘good to go’ button,” Emerson added. “But, more often than not, they pressed ‘go’.

“For SEKO, the decision of most of its UK customers to keep shipping stems from the fact they provide many of the most in-demand and COVID-19-resilient types of products for health, beauty and nutrition. Fashion and apparel volumes have dropped off and footwear has been quite slow because some customers are thinking ‘is cross-border worth it at the moment?’; but this too is showing the early signs of recovery.”

Carrier relationships vital

Close relationships with airlines have been a key factor too. “I’ve got to say that many airlines have been really good in terms of their responsiveness to the market conditions. We may have booked capacity on a Thursday flight, but if space came up on an earlier one in the week, they’ve been calling us to say, for example, ‘There are four bins of space to Sydney today, will you take it?’

“With the support of our customers, we’ve been able to respond to these opportunities at very, very short notice. This demonstrates the communications ‘leap’ we’ve seen across the whole of the supply chain during the COVID-19 crisis – in seeking to match supply and demand at the right price.”

He concluded: “There has also been realism on the part of all parties, not least e-tailers, who have had to change their delivery promise to end-consumers during the crisis. Normally, we’d have, say, a five-day delivery lead time to Australia, for example, but the customer expectation is now lower and this has been generally accepted.”