PARIS: October 05, 2016. According to the ECS Group, acquiring solid business relationships between Europe and the Asian market is proving incredibly important for general sales agent companies in 2016.
Adrien Thominet, ECS Group COO, says a partnership with the AVS GSA Group in Asia has made a big difference to the company this year.
He explains that this has led to a new trend emerging within the Asian market, particularly with AVS that operates in nine countries throughout the region. Despite "a crowd of 'local heroes' within the area", he says the lack of partnerships is providing an opportunity - albeit slightly different to what the company has been used to in Europe.
According to Thominet (right), building a network can be complicated but with AVS providing access to nine countries, the opportunity for growing new business is obvious – particularly in Mayanmar and Cambodia.
Because the relationship is similar to a start-up, the percentage of traffic between developing and emerging markets is currently very limited but Thominet says it is expected to grow a significant 10-15 percent in six months. Before the opening of borders within the region, Customs issues made business "tricky"; however with the new trade laws there is essentially "an entire new business to be built upon".
Currently, he says, Eurasia rates "have never been so low", allowing rail to become a cost-effective alternative to ocean and air transport. This has coincided with a slowdown of China exports to Europe last year and a consequential increase in freight rates from West to East. However the rise in e-Commerce and a subsequent reliance on airfreight has seen a helpful switch from ocean to air, he adds.
Despite Iran being a major player in the Asian market ECS sees little evidence of it opening up with respect to Europe. While airlines have begun flying, Thominet thinks his company needs to find a "a significant partnership" in order to establish a sustainable business.
He says the main issue this year is the general slump in airfreight rates due to overcapacity - particularly out of China.
In other markets, ECS expects an upturn in Central and South America, particularly Chile and Mexico. "Domestic India is also showing a similar signs, but it is the Eurasian markets that are leading the way in growth, China being the main contender over Europe," he continues.
Despite lacklustre world trade growth this year, ECS says its not had any deprecating effect on its business as Asia generally "remains a very strong producer" and China "is especially good at exporting to Africa", a region with which the company has strong, historic connections.
With China investing more and more in Africa, the lack of logistics solutions between the two areas is something ECS has been able to leverage explains Thominet.
Despite its switch to a consumer-led economy, China's 7.0 percent growth per annum has allowed ECS to dodge the bullets of general airfreight overcapacity and low rates. At the same time the 'We are Not a General Sales Agent' group continues to build on its relationship with AVS GSA while picking future 'Developing Market' opportunities with care.
The company's latest move was in September when it announced Jetstar Asia had appointed ECS Group Asia Pacific as its freight general sales agent in Singapore and 24 additional gateways in 13 countries.
For its financial year ending in June 2016, the Qantas subsidiary reported a 97 percent increase in underlying EBIT of A$452 million
Francis Loi, head of Commercial for Jetstar Asia says the ECS appointment is prompted by increased intra-Asia cross-border trade: "The rapid growth of the e-commerce marketplace in Asia is shaping the demand for airfreight as e-sellers and e-buyers prefer [it] for expedited deliveries. Demand for fresh perishables and special cargo across the region is expected to grow as consumption in Asia Pacific rise," he adds.
ECS will be responsible for developing Singapore-based Jetstar Asia's freight sales to existing and new customers based on the '3K' flight designator. Qantas Freight will continue to manage cargo services for the Australian-based Qantas Airways (QF) and Jetstar Airways (JQ) networks.
"Existing freight customers will continue to enjoy our reliable scheduled services across the network via Singapore and beyond, while the new capabilities from ECS will allow us to tap into new cargo business segments," Loi explains.