The economic impact of E-commerce on the U.S. airports: Cost savings and productivity growth

• Published in: Journal of air transport management 2024-07, Vol.118, p.102598, Article 102598
• Main Authors: Karanki, Fecri, Bilotkach, Volodymyr, Gao, Yi, Lu, Chien-Tsung
• Format: Article
• Language: English
• Subjects: Data envelopment analysis; E-Commerce; Scope economies; Total factor productivity; U.S. airports
• ISSN: 0969-6997; 1873-2089
• DOI: 10.1016/j.jairtraman.2024.102598

The rise of e-commerce, fueled by digitalization and shifting in consumer demand, has revolutionized air cargo. While all e-commerce stakeholders are engaged in fierce competition to increase their market share, airports as integral elements of the air cargo supply chain could not be apathetic to this competition. This study examines the economic implication of e-commerce on high cargo volume airports, focusing on cost savings and productivity growth. Utilizing the Farrell measure of input-oriented technical efficiency, we estimate scope economies for the U.S. airports between 2009 and 2019. The results reveal higher scope economies for high cargo volume airports, indicating greater cost savings resulting from e-commerce activities. In addition, the Malmquist index is employed to assess productivity growth. The index is decomposed into technical change, efficiency change, and scale change. The findings show a 3.3% overall productivity growth in the U.S. airport industry, primarily driven by technical change. Besides, high cargo volume airports exhibit higher productivity growth compared to low cargo volume airports, with 4.1% and 2.9% growth rates, respectively. The gap between high cargo volume and low cargo volume airports widened in 2017, aligning with the pre-pandemic peak in e-commerce activity. Furthermore, high cargo volume airports experience higher efficiency gains and technical advancements. While efficiency gains are attributed to improved performance and increased capacity utilization, the technical advancements can be explained by the digitalization and customized operations associated with e-commerce. Overall, the results highlight the significant contribution of e-commerce to cost savings and productivity growth in high-cargo volume airports. •High cargo volume airports experience higher scope economies, indicating higher cost savings due to e-commerce activities.•U.S. airports, overall, grow productivity by 3.3%, mainly due to technical advancements.•High cargo volume airports grow productivity more (4.1%) than low cargo volume ones (2.9%).•High cargo airports achieve higher efficiency due to e-commerce operations.