The shipping industry has not changed a whole lot over the last century. Vehicles have evolved and computers have replaced paper, but the basic logistics model that has dominated shipping since the turn of the 20th century is virtually the same. Unfortunately, that model is not favorable to small business.
Things needs to change. Thanks to the COVID pandemic, e-commerce has taken a giant leap forward. There are more e-commerce companies today than ever before. And more companies mean more packages being shipped both domestically and internationally. The vast majority of those packages are shipped by small businesses, not major corporations.
A System for Corporations
The uncomfortable reality of the shipping industry is that it is dominated by a few large corporations. Their corporate business model makes it too easy for them to maintain a logistics system that also benefits corporations first.
For example, larger corporate customers enjoy significant bulk discounts. They can ship for a lot less, thereby taking advantage of the economics of scale. The little guy cannot compete. If a small business needs to pay 20% more to ship the same products as a corporate competitor, who do you think will have the lower retail price?
Another big problem with corporate logistics is a lack of flexibility. Most of the big boys have established delivery networks that are extremely rigid. These networks do not adapt when things go wrong. They are not flexible enough to be quickly modified when needs arise. For all intents and purposes, this means customers are at the mercy of shipping company networks.
3 Much-Needed Changes
So how can the shipping industry be changed to accommodate small business? There are three things it needs to do:
1. Adjust Pricing Structures
The current pricing structure for most corporate shippers creates inequities based on volume. The little guy gets priced out because their shipping charges are so much higher. What is the solution? Adjusting price structures so that small businesses can be more competitive. As to whether that will ever happen, small business owners are not holding their breath.
2. Utilizing Excess Capacity
Next, the logistics industry needs to start utilizing excess capacity. This is not something that big-name carriers are likely to do, but there’s plenty of room for smaller carriers to establish businesses based on that very model. They do not run their own delivery vehicles or establish their own delivery routes. They take advantage of excess capacity among the major carriers.
3. Encourage More Shipping Resellers
A third change that would help level the playing field for small business is encouraging more shipping resellers. Preferred Shipping is one example of a reseller authorized to sell DHL products. The company is based in Sugarland, Texas.
As an authorized reseller of both DHL Export and Import Express, Preferred Shipping & Handling gives the little guy access to international shipping in both directions. DHL utilizes a global network of carriers in order to facilitate delivery times averaging between one and three days. And because DHL offers door-to-door delivery, shipping costs are reasonable, even for small businesses.
Encouraging more shipping resellers ultimately increases competition. And where there is competition, there are lower prices and more innovation. That is really what it boils down to. For small businesses to not be left out in the cold, they need choices. They need systems designed around their needs.
Will the shipping industry ever adapt to accommodate small business? Time will tell. But as small businesses continue to populate the e-commerce industry, shippers may someday find they have no other choice. They may be overwhelmed by small business.