LATAM Airlines Group announced this week that it’s open to signing an exclusive contract with an e-commerce operator, as it pursues increasing its cargo demand going forward.
E-Commerce Demand Accelerates
As a result of the global pandemic, traditional retail sales have declined but e-commerce has boomed. In the U.S. and Canada for example, e-commerce has seen a 129% growth year-on-year. By the end of 2020, online sales in the U.S. alone hit $861.12 billion. With no signs of slowing down, global online sales are set to reach $5 trillion in 2021.
More than any other time in history, people are shifting their buying habits as a result of lockdown. Covid-19 has accelerated the e-commerce industry’s growth, resulting in more businesses going online than ever before. In the aviation industry, businesses that have embraced the e-commerce trend have been able to generate much-needed revenue.
However, it must be noted that within e-commerce, the competition is getting steeper, with an estimated 24 million e-commerce stores live around the globe, and online shopping behaviours changing faster than ever before. For online businesses, the changing economy requires them to keep up with emerging e-commerce trends.
What Are People Buying Online?
Research carried out by Medium indicates that consumers prefer to buy durable goods, with fashion, household goods, electronics, and event tickets as the top purchases. However, the global pandemic has seen demand grow significantly for non-perishable goods such as food deliveries, flowers, and other supplies.
In Latin America, the e-commerce revolution has grown substantially during the pandemic. Although due to poor infrastructure, it has fallen behind. Amazon.com Inc, the world’s leading e-commerce site has begun to advance within the region. For the Latin American aviation sector, this presents huge opportunities.
LATAM’s Strategy for Recovery
Due to low passenger demand, Chile’s LATAM Airlines is looking to boost its cargo operation and is open to signing an exclusive contract with an e-commerce operator in Latin America. LATAM is the largest carrier in the region, however, it has felt the impact of Covid-19. As the pandemic caused the air travel sector to collapse, it filed for bankruptcy protection in May 2020. Since then it has seen its cargo division take off and recover faster than the rest of the company.
LATAM now plans to permanently convert eight of its passenger planes into cargo carriers. It’s been a similar story for many global airlines, who have seen cargo and online retail aspects of their businesses boom as passenger numbers decline.
Andrés Bianchi, the chief executive of LATAM’s cargo division, said:
“We are seeing e-commerce as a trend in the region that will continue growing, not just domestically but increasingly internationally. That’s why we are going to add two (cargo) planes in Colombia, as well as supporting the growth of the salmon industry in Chile.”
Targeting international markets is a key part of LATAM’s strategy. Popular exports of food and flowers from the region via cargo planes will play an important role in the Santiago-based airline’s recovery. By opening the network capacity to e-commerce partners, LATAM can be sure of a boost to its operations and its opportunities.
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