You know what’s easy? Setting up an e-commerce web store. Shopify has 500,000 merchants, a number that’s grown 74 percent per year over the last five years, according to a January 2018 article in The Atlantic. You know what’s easier? Buying stuff from those web stores. You know what’s hard? Fulfilling orders cost-effectively from the stores while meeting the delivery promise to your customer. You know what’s even harder? Fulfilling that order across international borders, a trend that is rapidly gaining traction.
Just as nature abhors a vacuum, markets abhor unmet needs. As global e-commerce grows, it is attracting service providers of all stripes to help e-tailers meet the needs of their global customers with cost-effective, on-time delivery. This trend is expected to result in what logistics experts are calling “The Parcel Tsunami,” coming to a shore near you.
The Tide Is Coming In
These days, the online store you ordered from probably doesn’t even have the item in inventory. The merchant may be relying on a supplier to ship it directly from where it was manufactured to the consumer’s door, The Atlantic article explained. One tiny parcel, shipped all the way from China is like a ripple in a huge wave.
According to a report by Pitney Bowes, “Parcel volume has grown from 44 billion parcels in 2014 to 65 billion in 2016, and the increase in growth shows no signs of slowing down, with the Index estimating parcel growth will continue to rise at a rate of 17 to 28 percent each year between 2017 and 2021.”
Customs Is Drowning and Customer Expectations Are Underwater
Cross-border parcel movements are massively complex. The consolidation and deconsolidation of parcels across international lines are putting stress on every aspect of the global logistics infrastructure. Customs operations that have traditionally been set up for bulk shipment movements, now have to consider clearance, duties, and taxes for more frequent, smaller shipments.
Moreover, the traditional import model completely changes with a direct-to-customer international e-commerce model. And this is a concern for countries because the more easily taxable retailer or distributor goes away. The e-tailer is more elusive to taxing authorities, and the value amounts too “de minimis” for them to pursue.
These disruptions are causing delays in the global e-commerce supply chain, and customers are noticing. In a recent post on Talking Logistics, Adrian Gonzalez discussed the “messy reality” of it all: “Many consumers are not loving the cross-border e-commerce experience, and most of the issues are not with the buying part of the process, but with customs clearance and final delivery.”
We’re Going to Need a Bigger Boat
UPS, FedEx, and DHL are stepping up with services that span first mile, customs clearance, and last-mile visibility and delivery across borders. Ocean carrier Maersk recently announced its intention to “move inland”. Pitney Bowes’ Complete Shipping and Newgistics delivery services are set up for global injection into USPS’s delivery network, meeting expectations for faster delivery at competitive prices.
These are all trends that in the long run could bail e-commerce merchants out. But they will need transportation management software to help sort through and simplify all of the complexities inherent in moving packages from first mile at international origins through to the last mile. Let the innovations begin.
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