This article originally appeared in the September/October issue of PARCEL.
The world is getting smaller by the day, but the delivery of international e-commerce orders still has its challenges. We have seen the delivery expectations in the US go from seven to 10 days down to two days (and free, in most cases), especially during the peak season. The international express carriers (DHL, UPS, and FedEx) have done a great job in speeding up the delivery time cycle (two to three days). DHL Express has developed the most sophisticated and streamlined global network for the past 48 years. However, there seems to be a gap between the express operators and postal solutions. Here are the big challenges that global e-tailers are challenged with relative to this gap:
1. Country Guidelines: It is amazing how a product can be sold in one country with no issues but is heavily restricted or not allowed into other countries. It is imperative to understand the “rules of the road” in each country. In addition to commodity specific rules, there are value rules that could make it easy or hard for the delivery. Some countries will allow an individual to import a specific value amount per shipment or per month. This can dictate the term of the shipment as duties and taxes unpaid (DTU) or duties and taxes paid (DTP). In the global e-commerce world, no one likes to get the surprise that they owe money for duties/taxes. This will create a poor customer experience, and the consumer will most likely not return to the website. In most cases, they will probably return the item to the merchant, which will become a complete disaster.
2. Customs Clearance: The express operators are subject to stricter inspection practices than most postal authorities. This has created a bit of a headache for all parties involved. If the shipment meets all the rules and regulations of a specific country, then there should be no problem, with the exception of a slower delivery and a higher probability that duties and taxes will be required on the shipment. The postal authorities have a bit of an edge here but are not competitive from a cost and service perspective. There are some countries that the USPS or a parcel consolidator may be the best option.
3. Cost Competitiveness: The express carriers are trying to be more competitive, but they have built private delivery networks, which are expensive to operate. The international parcel consolidators offer lower-cost solutions but are not as quick as the express operators. The value of the commodity plays a key role in determining which service is best to use. I believe there is a gap in this model and a hybrid could be created that would be between an “express model” and a “postal model.” There are some providers doing this model to specific countries but on a limited basis. This is the single largest challenge that the global e-tailers are facing… sounds like an opportunity in the market.
As the world gets smaller, consumers do not care how a package gets delivered to them… just that the delivery is fast and cheap. Hence, our global delivery challenge.
Michael J. Ryan is the Executive Vice President at Preferred Parcel Solutions and has over 25 years of experience in the parcel industry. He can be reached at 708.224.1498 or michael.ryan@preferredship.com. Join him at 11 am on September 19 for his session titled, “Parcel Optimization for Small- and Mid-Sized Companies” at the 2017 PARCEL Forum.
