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Guest Post: E-Commerce Leaves its Mark on Logistics By TradeMachines.com

Our friends at TradeMachines.com were kind enough to offer our readers their perspective on E-Commerce and Logistics and offer a cool new infographic that you may find very useful. Big thank you to Molly Connell at Trade Machines.com for her insight.

 This guest post is written by TradeMachines.com.  Article and opinions expressed below do not necessarily reflect the views and opinion of ICC Logistics Services. 

Global e-commerce sales made up more than $2 trillion this year and the U.S. segment is currently estimated to be worth over $400 billion. By 2022, this number should be over $600 billion which means a 50% growth rate within 5 years. Taking into consideration that the first online shopping system was only introduced in 1979, we can state that e-commerce is truly a rapidly growing market.

But other than its impressive development, there’s another factor that makes this industry very intriguing: Its impact on logistics.

The global logistics market is sized at approximately $8.1 trillion which is uncomprehendingly big and still, it is currently undergoing a major change thanks to the influence of e-commerce, an industry a quarter of its size.

Not only did e-commerce offer new opportunities to shop, it also changed our expectations of shopping. The internet enabled us customers to shop whenever and wherever we want and by now this has become the norm. We can choose from a large selection and with the ability to compare offers we can find the best price. What differentiates one offer from another is typically the delivery.

Nowadays, customers are asking new questions such as “Why shouldn’t I buy from abroad as long as it can be delivered?” or “Why would I pay for shipping when someone else offers it for free?” but probably the most common question is “Which retailer can deliver my package the fastest?”

Logistics market players are therefore currently in an intense race to adjust to the new expectations. Reliability, track-ability, and cost-effectiveness is the key to future success. Market leaders are installing innovations, for example, UPS has been testing high-tech drone trucks or Maersk, the world’s largest container shipping company is constantly using bigger ships to be more energy efficient and to benefit from the Economy of Scale.

But traditional logistics companies are not the only ones working on gaining a better position in the market by improving themselves, newcomers are also interested in getting a piece of the pie.

Take a look at the following infographic to see how two giants, Amazon and Uber are expanding their business model into logistics. Will an Online Retailer and a Taxi App be the ones gaining the most from the restructuring of the industry?

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Bloomberg: Amazon Testing Rival to FedEx/UPS

Some folks were surprised when Bloomberg News and other news sources reported yesterday that Amazon was experimenting with their own delivery network which could come at the expense of their current business partners UPS and FedEx.  The reality is that Amazon’s move into establishing their own delivery network has been in the works for years now.

The real question that remains to be answered is whether Amazon can and/or is willing to build a complete delivery network here in the US and therefore no longer have a need to use UPS or FedEx for their domestic deliveries.  We doubt that will ever come to pass completely, but we are sure that Amazon will at some point in the future be a major delivery service provider in many of the major metropolitan areas of the US.  They have been building and fortifying those metro delivery networks for years now and will be a strong delivery force in many major metro area’s for sure.

There also remains the possibility that Amazon will compete head to head with both UPS and FedEx for parcel deliveries from other shippers at some point in the future.  We believe that Amazon has felt for quite some time that the costs to deliver parcels through UPS and FedEx are more costly than what Amazon believes they should be.  Perhaps if Amazon does compete head to head with the two parcel giants, they may find out that reducing those costs may not be as easy as it seems.

 

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