Shopping without borders
Japan Airlines Cargo is not exactly soaring on the appetites of online shoppers, but they have given rise to a premium service that is showing rapid growth, which has prompted the carrier's management and its joint venture partner to expand the offering.
Recent moves by Chinese carriers show that their head offices spotted an opportunity to make money from the rampant growth in domestic online shopping. The international arena has been more challenging and less explosive in its momentum. The efforts of the more dynamic members of the Association of Southeast Asian Nations notwithstanding, the Asia-Pacific region is still a considerable distance from the economic integration that would allow goods to flow freely between countries. Still, increasingly consumers in the region are ignoring this and look beyond their borders for merchandise to order online – undaunted by the hurdles of customs, taxes and currency exchange rates.
Figures from Beijing-based iResearch show that e-commerce transactions between China and other countries went up 32 percent in 2012 to reach US$375.8 billion (273 billion euros). The lion's share of this volume was business-to-business traffic, but business-to-consumer activity is also on the rise. A recently established e-commerce industrial park in Hangzhou, China, has attracted the likes of Alibaba, eBay China and SF Express, and it includes a customs clearance facility.
Not surprisingly, integrators and postal services have been in the vanguard of the international drive. This has spawned alliances between post offices, such as a joint product by the four involved postal outfits that allows eBay sellers in China, Hong Kong and Singapore to sell to consumers in the U.S.
In tandem with JAL Cargo, Japan Post launched a door-to-door service in April that targets aficionados of Japanese high cuisine in neighboring countries. Consumers in Taiwan and Singapore can use it to order fresh designer sushi and similar delicacies. The Cool EMS product is an international speed post service for temperature-controlled parcels from Japan. It combines Japan Post's express parcel service, JAL's experience in handling temperature-controlled cargo and a special container for overnight delivery to select international markets.
The containers, which were tailor-made for the new service, can accommodate shipments up to 33 pounds (15 kilograms). They can maintain temperatures between 35.6 and 50 degrees Fahrenheit (2 and 10 degrees Celsius) up to 80 hours.
JAL manages the airport-to-airport segment, while Japan Post controls the other legs of Cool EMS shipments all the way from shipper to consignee.
Besides topnotch seafood, the service also works for other temperature-sensitive commodities, such as pharmaceuticals, according to Shinya Nagayasu, assistant manager of international route marketing at JAL Cargo.
Initially, the service was limited to the sectors from Tokyo and Sapporo, Japan, to Taiwan and Singapore, but the network is expanding. In October, Hong Kong was added to the list of destinations, and other points in Asia are on the drawing board, according to Nagayasu. There are also plans to add more origin points in Japan, such as Osaka, Nagoya and Fukuoka.
An expansion of the service parameters is also in the works. By April, the partners intend to add an offering aimed at cargo that has to be kept below 32 degrees Fahrenheit (zero degrees Celsius).
JAL Cargo is bullish on the new revenue stream.
“Japan Post told us that they are experiencing a rapid increase in international mail thanks to the growing e-commerce market in Asia,” Nagayasu says, adding that JAL is expecting to see more demand for Cool EMS as e-commerce grows.
Some forwarders have also pushed into the international shopping arena. Tigers Ltd., a forwarder based in Hong Kong, has designated e-commerce as a strategic growth area. Through shareholder GeoPost, a subsidiary of La Poste Group in France, Tigers has access to the network of GeoPost subsidiary Dynamic Parcel Distribution, which claims to be one of Europe's leading B2B parcel providers.
“E-commerce is changing this industry, and it is a growing portion of our business,” Tigers CEO and group managing director Andrew Jillings says. He adds that the firm's traditional forwarding business has grown, “but the express side is where you can make money.”