Burrell Aviation

Market Dynamics: The Expansion of E-Commerce

One of the primary drivers of the supply/demand imbalance affecting aviation generally is the proliferation of E-commerce over the past several years.

 

There has been a fundamental shift in how the American public purchases goods and services.

Products are now being acquired through E-commerce platforms at an unanticipated and unprecedented rate, a trend that has been further accelerated by the COVID-19 pandemic.

This shift towards a greater reliance on E-commerce purchasing has created surging demand for logistical support at airport locations across the country to accommodate the delivery of goods in an efficient manner.

Demand for E-commerce is significantly outpacing current available infrastructure, thereby creating a discernible market dislocation.

The consulting firm McKinsey & Company is just one of the many prominent firms and organizations that have extensively studied the proliferation of E-commerce taking place over recent years.

The supply of aviation facilities that support the shipment and distribution of products is no longer correlated with overall demand – there is a scarcity of adequate space for inevitable growth.  Surging demand for such aviation services will not be satisfied by the infrastructure in place or current funding plans for new development.

Even prior to the onset of COVID-19, traditional retail and in-person consumerism were experiencing notable effects from technology and the online alternative solutions it has made so readily available.

The pandemic’s creation of apprehension for public interaction has only augmented this shift away from prior generations’ purchasing norms.

 

The impact of E-commerce’s explosive growth is beyond volumetric in nature.

Market Dynamics: Airport Congestion / Land Scarcity

The increased use of freighters for integrators and E-commerce traffic has fundamentally altered the demand for facilities and infrastructure at existing high-volume cargo airports, creating interest in the use of alternate airports due to the unavailability of land at hub locations.

  • Prior to the COVID-19 pandemic, many airport facilities were antiquated, constrained by height, depth and configuration.
  • Climate-controlled and specialized cargo facilities are only available on a limited basis.
  • Aircraft apron for freighters is in high demand, and many airports confront a utilization imbalance between facilities with direct ramp access and belly cargo facilities accessible via restricted service road.
  • Increased volumes have triggered a shortage of appropriate storage for Ground Service Equipment (“GSE”).
  • Landside infrastructure at many mature airports, including roadway geometry, was not designed for modern tractor-trailers.

Market Dynamics: Airport Revenue Deficits

The ability of airports to tackle the infrastructure and facility challenges with which they are now confronted has been substantially compromised by recent revenue shortfalls.

This tremendous gap is made even more significant by the massive loss of revenue (estimated at $40 billion) that airports experienced over the past year.

Market Dynamics: Other Considerations