Keen observers of the shipping and delivery industry will have seen interesting news coming out of Seattle. In mid-January, CNBC reported that Amazon had announced a national easing of its Fulfilled Prime program, news that was met eagerly by other shipping industries around the country. With Amazon reducing the stress placed on their third party shippers and providing more space to breathe in what is a fiercely competitive sector, consumers are asking what is being done to meet the demand that Amazon’s reduced capacity is leaving behind.
Greater flexibility
While Amazon are dropping their guaranteed 1 and 2 day delivery program, this doesn’t mean that the need for rapid, affordable and overnight shipping will go away. Indeed, industry veterans LSO note that the demand for such service is as great as it ever has been, and businesses focusing on this area of shipping can enjoy a much greater share of the market. External factors are also providing impetus to small-scale shipping to get ahead of the curve. A report by US News found that traffic has remained at unprecedented low levels; this enables the fulfillment of shipping orders at greater speeds – and with greater reliability – than could have been achieved previously. The reduction in Amazon third-party shippers, which already rival the size of the UPS in volume, will help to reduce congestion and provide more breathing space for rivals.
More signs of expansion
Amazon’s semi-withdrawal from the shipping market follows on the heels of the USPS announcing, according to Reuters, that they would be reviewing shipping contracts with every large member of the industry. This is an indication as to the need for specialized, high-quality service. The gap in the market that is being created comes with the shift in the consumer base demanding what they require – and when.
A huge opportunity
The current US vaccination program is set to step up another notch with the Biden administration behind it. MarketWatch have noted the tremendous scale of these vaccine deliveries, with up to 6 million being administered over the course of days. A huge risk with these vaccines is expiry, and as a result they need to be moved with absolute haste. While contracts exist with many of the big shipping industry players, this may not be enough to fulfill orders. With micromanagement required in many counties and states, and with the budget theoretically limitless in its scope, the federal authorities are utilizing small scale shippers to ensure that vaccines are delivered safely. This once again creates a huge gap in the market for companies to put their stake in the ground and make a real positive impact for themselves.
This decentralization and movement of business from big players to smaller actors can only be good for the quality of the shipping industry and onward innovation. The challenges facing shippers today are unlikely to go away for a number of years, presenting opportunities like no others. Either way, the sector will be an interesting one to watch.
