As E-Commerce Grows, What is the Role of the Shipping Box Carriers?  

There is a highly competitive situation brewing between the world’s biggest shipping container line, and some of the world’s largest online merchants. It’s too early to tell yet, but it’s very possible that online retailers could decide to collaborate with the big shipping container firms, or they could decide to enter into direct competition with those companies.

Although retailers will probably not get into the business of operating any kind of container ship fleet, they are intent on controlling all aspects of transportation from the vendor right down to the end customer. Some retailers have built their network of merchandise warehouses and package centers to the point where they now have a freight-forwarding service capable of booking cargo on their own truck-trailers and airplanes.

All these modes of transportation are responsible for delivery of packages to global warehouse sorting centers. In numerous cities worldwide today, it is now possible to see couriers and vans delivering packages directly to purchasers’ doorsteps, after which they photograph the package and email that photo to the customer to prove delivery occurred.

The goal of retailers in all this is to guarantee prompt delivery, while also effectively managing costs. That’s a good thing for consumers as well as for the retailers – but what happens to the box shipping companies in this scenario?

While some shipping container companies are directly affected by the tremendous success of the big online retailers, some of the European counterparts of these shipping container lines are now aligning themselves with Chinese vendors to push their exports all over the globe.

It’s very possible that these European shipping companies might form an alliance with various carriers, in order to gain efficiencies in export capabilities. It would make good sense for this kind of partnership, since they are natural partners for the European market share, especially in Eastern Europe. So, what will be the shape of things to come, with regard to shipping box carriers?

The Battle of the Heavyweights

According to the Chief Executive Officer of one of the biggest shipping container lines, there is growing concern that the big retailers could shift their ocean cargo to other shipping lines. Some of these large shipping container companies are therefore obliged to go all out to do a great job for the big retailers, realizing that they have the resources to potentially take on the task themselves to see if they can do a better job at it.

In January of this year, a report was circulated that stated retailers had plans to manage a greater number of deliveries directly to customers’ doors. This raises the question of whether or not they might attempt to assume greater control of the transportation of shipments which are destined for their own warehouses.

In fact, retail delivery service is growing to the point where it could compete directly with FedEx, UPS, and DHL. It looks likely that sellers will no longer move their merchandise through those shipping companies but may book directly with the retail seller. As retailers’ business reaches a critical volume point and companies learn how to gain shipping efficiencies, it’s likely that they will collaborate with third-party vendors, so as to grow their global enterprise and squeeze out competitors.

There’s no question that the biggest online retailers control an enormous volume of global package shipping, as evidenced by annual statistics. The number of packages delivered through the largest retailer is estimated to be in the neighborhood of eight billion packages per year, and that number grows every year.

In order to maintain their position in the global shipping market, shipping container firms are developing a strategy which includes combining a port operator and a freight forwarding service that will collectively enable them to offer an integrated supply chain to the big retailers.

However, this is a project that is still in the works, because the freight forwarding service component of the supply chain is designed to move air freight rather than retail boxes. That means this supply chain has not yet been fully assembled and will require ongoing development before it can achieve full maturity.

The Shape of Things to Come

As you might guess from the information above, it is far from clear at the present time how all this will shake out. Shipping container lines are doing all they can to establish a more efficient supply chain, and this is totally compatible with the goals of retailers as well. If shipping companies are successful in establishing this new, highly efficient supply chain around the globe, it might well be that they establish a long-term relationship with big retailers that makes the two inseparable.

Shippers are going even further than attempting to set up the ideal supply chain, having recently introduced an entirely new digitization strategy. They have also announced a joint collaboration project with IBM, in which both companies will develop blockchain technology to track and manage the trade which crosses the borders of countries.

This could be a tremendous achievement if it works out as the two companies envision, and it could streamline the entire supply chain such that efficiencies are gained, and tremendous savings are achievable. That, of course, is the bottom line to all of this. Whether you’re talking about e-commerce trade or traditional retail sales, cargo will always have to move between two points as inexpensively and reliably as possible.

In the future, it remains unclear as to whether the current arrangement between big retailers and the shipping box lines will remain intact and be even more solidified, or whether retailers might decide to enter the fray themselves.

This is a situation that is changing rapidly, with all the major players making their best effort to be as competitive as possible, and to make appropriate business alliances. When the dust clears, it will be interesting to see exactly what the shape of things has become, and who will be the big winners and losers in the global cargo shipping race.

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