This Editorial appears in the June 26 & July 3 edition of Transport Topics.
E-commerce really has some buzz going for it now. In just this issue, there’s UPS instituting a holiday season surcharge for it, FedEx is considering following suit, a logistics group says the service has generated a parcel shipping boom, a major e-commerce practitioner said it will buy a grocery chain and a stock analyst says the motor carriers that can handle this service successfully will be much in demand.
E-commerce saves time for consumers and helps them avoid traffic. Shop from the comfort of your laptop or smartphone, order a product, pay for it online and have a freight transportation professional deliver it. No need to struggle for parking near a store, or even chip a nail hailing a ride from Uber or Lyft.
While parcel carriers are dominating deliveries now, the options for buying are expanding beyond large envelopes and 5-pound boxes. Consumers can get heavy, bulky items such as exercise equipment, furniture, gun safes, power tools and kayaks.
Motor carrier executives have a word for this: Freight.
All of this is exciting and interesting, but clever people will also exercise caution.
These trends are not all newly created shipments. E-commerce is succeeding, in large part, by selling goods that otherwise would be sold at a store. E-commerce has eaten many venerable retailers’ lunch, and some other meals, too.
Traditionalists are worried, not unreasonably, that e-commerce will act to hollow out communities fueled by a once vibrant, local retail industry. This was also said about Wal-Mart Stores more than a decade ago.
E-commerce is changing rapidly as it booms, with managers trying to get it to make sense economically. We know a truckload executive who declined to do further business with Amazon.com because the retailer kept too many of his trailers for too long, leaving him short on equipment.
While shoppers are often told shipping is free, the president of Penske Logistics assures us that it certainly is not (story p. 5). If retailers want to offer free transportation as a gimmick to boost sales, that’s up to them.
For trucking companies, though, transportation is the core of their existence. Beware of enormous volumes of revenue that are built on a foundation of no profits.
As the late economist Herbert Stein said, “If something cannot go on forever, it will stop.”