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  • 12 Aug 2019
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What is the Impact of Cross-Border B2C E-Commerce to the Maritime Shipping Sector?

By Michael Zhang Xiadong

12th August 2019

We all observed the rapidly growing cross-border B2C e-commerce, and it certainly benefits the air freight business, but what about the impact to the maritime shipping sector? Let’s analyse the two aspects.

Firstly, the increasing B2C cross-border e-commerce orders drives demands on consolidated shipping.

In the early days of e-commerce, most e-buyers were not time-sensitive on delivery but were rather price-sensitive to the high air courier fees. As such, the much lower delivery charge via sea shipment was an ideal option. However, the seller or the online marketplace would hesitate to provide a sea shipment option as it was difficult for them to find enough orders to the same destination for a sea shipment consolidation.

Figure 1 Retail e-commerce sales worldwide from 2014 to 2021 (Source: eMarkerter Statista)

Figure 1 Retail e-commerce sales worldwide from 2014 to 2021 (Source: eMarkerter Statista)

Times have changed and the volume of online orders is on a steady upward trend.1 (Figure 1) The steady upward trend in B2C cross-border e-commerce is expected to drive higher demands for cross-border shipments, thus creating economies of scale for both air and sea transportation service providers, including traditional freight forwarders. This is especially so for consolidated shipping by cross-border B2C e-commerce participants.

It is forecasted that the global B2C cross-border e-commerce market will grow to $1 trillion in 2020 from $230 billion in 2014. More than 900 million people worldwide will become international online consumers by 2020, with purchases amounting to nearly 30 percent of all global B2C transactions.2

Second, the expanding product category especially the bulky items in cross-border B2C e-commerce goods list.

With the rapid advancement of digital technology and expansion of logistics accessibility over the past decade, there are now a wide array of commodities being supplied via e-commerce (Figure 2), instead of just limiting to certain types of goods such as books and digital gadgets.3

Figure 2 Share of Consumers Having Purchased Product Type From Foreign E-Commerce Sites (Source: DHL)

Figure 2 Share of Consumers Having Purchased Product Type From Foreign E-Commerce Sites (Source: DHL)

Bulky products such as furniture and other low profit margin items need not be delivered via air, but instead through road or sea shipment. Sea shipment is one of the most economical ways to deliver e-commerce goods across continents, especially for bulky items.

The conclusion is clear that the growing cross-border B2C e-commerce will positively impact the maritime shipping sector.  

Stay tuned for the next release as we talk about the challenges commonly faced in cross-border shipments. Topics such as how to ensure smoother customs clearance, compliance to trade agreements and regulations, how to have a reliable track and trace service in cross-border shipment etc., will be discussed.

Reference: 

[1] The Guide to Cross-Border Commerce: Operational Considerations & Logistical Challenges. (2019, June 11). Retrieved from https://www.bigcommerce.com/blog/cross-border-ecommerce-guide/#undefined

[2] Report: Cross-border E-commerce to Reach $1 Trillion in 2020 [Charts]. (n.d.). Retrieved from https://smallbusiness.yahoo.com/advisor/post/121605721332/a-report-from-accenture-and-alibaba-groups-aliresearch

[3] DHL Express. “The 21st Century Spice Trade: A Guide To The Cross-Border E-Commerce Opportunity” (2016): 14-15. Web. 26 July. 2019.

 

About the Author

Michael ZhangMichael Zhang advises Customs and relevant authorities worldwide on Single Window and other trade facilitation implementation. He has more than 16 years of IT and operation experience spanning across third party logistics, cross-border supply chain and trade facilitation. His deep domain knowledge in trade compliance is coupled with extensive experiences in business process reengineering and solution implementation in APAC, America and Africa. 

Michael Zhang Xiadong

Associate Principal Consultant, GeTS (Global eTrade Services, subsidiary of CrimsonLogic Pte Ltd)