The engines of an ASL Airlines Belgium 747 freighter are cooling down on the tarmac at Liege Airport (LGG), where the aircraft is resting after an 11-hour flight from Ürümqi Diwopu Airport (URC) in China’s far-western Xinjiang province. A crew of neon-vested ground handlers quickly whisk a mix of pallets and containers off the massive aircraft. Much of the cargo is comprised of tightly packed bags of miscellaneous, individually packaged products – telltale signs that most of the cargo is e-commerce-related.
Once the aircraft is unloaded, and the contents clear customs, transitory e-commerce consignments are sequestered to a nearby facility, where workers standby to process the parcels. Within a matter of hours, preaddressed packages have been manually sorted and are ready to be handed off to the next leg of the journey – whether it be final-mile delivery, or intra-Europe post.
Across many European countries, air-to-final-mile has been a winning combination for e-commerce. This had long been the case in Sweden where, like in many European Union (E.U.) countries, e-commerce continues to grow at double-digit rates. PostNord handles the final-mile for most inbound flows to the country by connecting air imports to the post’s last-mile delivery network. During peak periods in 2017, such as lead up to Christmas, the postal operator processed more than 160,000 parcels per day, according to Expressen.
As Sweden witnessed in Spring 2018, however, incessant cross-border growth e-commerce growth is not unstoppable. In March 2018, import airmail processing volumes suddenly slowed to a trickle at the post’s Stockholm facility, and by mid-April PostNord had amassed more than 400,000 refused packages, most of which needed to be returned to China.
The cause of the hiccup? A bold political move, it turns out. On March 1, 2018, Sweden began assessing a value-added-tax (VAT) on all postal items arriving from non-E.U. countries. Customers caught off-guard by the measure, which was announced just weeks prior, suddenly found themselves owing VAT and postal service fees – in some cases equating to more than the value of the parcels’ contents. The Swedish experience should be heeded as a warning of what could happen elsewhere, particularly as new legislation from the E.U. Commission now threatens to burst the E.U. cross-border e-commerce bubble.