E-commerce growth increases service-level competition among logistics providers

COVID-19 has further accentuated the shift towards e-commerce in a trend that was recognized by regulators, sellers, buyers and logistic service providers before the pandemic. For freight forwarders to best adapt to rising demands to digitize the world of trade, there will be a need to provide competitive quality, cost, service, and delivery options that are available from existing and well-established service providers who have integrated processes and systems and cognitive computing or machine learning capabilities. [caption id="attachment_67812" align="alignright" width="450"] SATS' e-commerce AirHub in Singapore.[/caption] With an increased consumer appetite for e-commerce, supply chain solutions must be optimized to meet the demands of cost-efficiency and speed expectations. Integrated technology is crucial to boost efficiency, enable advanced tracking and order management, improve customer satisfaction, strengthen supply chain communication and ensure on-time delivery. The e-commerce landscape will continue to expand as buyers become even more comfortable with existing options as to consumer deliverables from competitive and nimble sellers. There will also be a perceived continued concentration of delivery with key players such as Amazon, express carriers, and postal systems (EMS), due to their global reach and ease of last-mile delivery. The challenges in adapting to the e-commerce business model will be felt by the traditional freight forwarding process. Without significant mindset change and business model adaptation, freight forwarding will struggle to provide the width and depth of desired and expected customer service delivery, as well as price competitiveness, track and trace, and regulatory reporting and border clearance in a multitude of economies. The traditional model requires adaptation where providers’ e-commerce strategy must streamline warehousing management to handle larger inventory and facilitate timely cross-border shipping to ensure complete customer satisfaction. In 2020, with the world in lockdown, e-commerce sales soared – with more than 2 billion people purchasing goods or services online globally . Digital transactions are taking trade to a different dimension and logistics with it. Issues such as government fiscal leakage, community safety and security, intellectual property and consumer protection (physical and financial) are now seen, in the European Union and the United States, as issues that need to be addressed in the global context of the movement and border clearance of e-commerce. Other economies watch with interest as to changes on the parity, equality and alignment of traditional cargo process management. While e-commerce is a significant economic solution, it is one that exhibits a digital divide between developed and developing or emerging economies. To achieve a level of parity, equity and global market access, resources, capital, and government support for change must be priorities. In addition, policies and regulations that promote uniformity and consistency in the border report and clearance process need to be implemented for countries to address digital trade inequalities and interconnectivity. The World Customs Organization (WCO) and the World Trade Organization (WTO) have a vital role to play in this deliverable to make supply chains more efficient and resilient for all. For example, the WCO Authorized Economic Operator (AEO) Programme can be leveraged to include reduced levels of control, simplified procedures, make use of the entity’s reputational benefits and deliver cross-border facilitation benefits. The success of these aspects will depend on close dialogue and collaboration between customs authorities and the private sector, more widespread implementation of mutual recognition agreements, and the realization of tangible benefits for AEOs in the interests of facilitating smooth and efficient supply chains. In addition, all industry stakeholders will have a key role to play in the new challenges e-commerce presents in supply chain safety and security. FIATA, as the global voice of freight logistics, recognizes the economic, community and sustainable value in e-commerce and encourages its members to grow new business alongside the growth of their trading community. For logistics and trade to be successful in the future, it is imperative to have access to adaptive and highly capable and dependable logistics networks backed by investment in infrastructure and improved facilitation. To achieve those goals, FIATA’s digital strategy focuses on transitioning towards seamless data exchange across the industry. E-commerce requires customer data to constantly change hands between stakeholders in the supply chain, with logistics providers bearing greater risks from the lack of transparency and visibility. FIATA is committed to establishing a transparent trading community by creating a network of trust that will allow freight forwarders to exchange authenticated and secured data, enforcing the usage of standards in paperless trade (such as the electronic FIATA Bill of Lading), and facilitating interoperability between systems to ensure freight forwarders stay operationally up to date with the new business models. FIATA would like to thank Stephen Morris, former FIATA Director General , for his contributions to this article.

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