Experts believe that legacy logistics providers will maintain the stronghold they have on shipping and delivery. While e-commerce companies like Amazon are considered to be important partners to such firms, they will not be serious challengers in the short term.
Retailers are trying to stay on top of the current surge in digital shopping. It has never been more important to meet customer demand for fast shipping, and this is why many e-tailers are turning to traditional logistics companies that have a proven track record in processing large package volumes.
Such stellar service comes at a price, however, which is why some tech giants are trying to find ways to disrupt it. For example, Amazon is investing in setting up its own fulfillment mechanisms to help cut logistics costs. This can be seen in its up-and-coming drone program and the use of package pickup locations.
Is It a Tougher Road Than They Anticipate?
Despite this, traditional logistics providers are expected to stay on top for now and reap the rewards of the explosion in e-commerce. Deutsche Post CEO Frank Appel recently told CNBC that these firms are underestimating just how complex the logistics business really is and will be surprised by just how difficult it is to send and return packages while keeping levels of service quality high. Appel also feels that trying to cut human workers out of the process is a mistake.
With the global shipping market currently estimated to be worth $2.1 trillion, legacy shipping firms have a lot at stake. While firms such as Amazon, Walmart, and Alibaba have focused mostly on their last-mile delivery services, they are now looking into the first-mile and middle of the shipping chain. Amazon in particular has already made some inroads, such as launching its same-day delivery service through its own carrier fleet, but only time will tell if it can give UPS and FedEx a run for their money.
This blog post was based off of an article from Business Insider. View the original here.