Air Cargo Forecasting in an Age of Electronic Retail

Abstract

Airports face numerous difficulties in capital planning as a result of instability and unpredictable demand. Some trends such as excess bellyhold capacity have depressed demand for dedicated cargo flights, whereas others like growth in electronic retail (e-retail) are stimulating demand unevenly among airports. If e-retail distribution is following a different pattern from general cargo, then it may reshuffle cargo volumes among airports in a way that is unforeseeable by most forecasting approaches. It has been difficult to estimate whether e-retail shipments would follow the same geospatial patterns as general cargo because of the dearth of data on e-retail distribution networks. This study examines domestically oriented e-retail logistics to test its relationship with airport cargo throughput controlling for regional variables that also influence cargo volume. The regression models show that an airport’s accessibility to landside e-retail logistics activity helps predict that airport’s cargo volume in a way that access to traditional retail logistics does not. The findings support the alternative hypothesis that e-retail may reconfigure distribution networks and boost cargo volume at some airports, opening opportunities to gain market share for airports that are new to e-retail. Depending on the extent of the reconfiguration, e-retail growth could temporarily degrade the accuracy of common forecasting methods. Airports can respond by collecting qualitative and quantitative data where possible and adopting scenario-based, adaptive policy making that hedges risks.