Industry News

Logistics & eCommerce News Update: June 27, 2020

This week, we’re looking at what increased cross-border shipping rates mean for American retailers and Amazon Shipping’s launch in the UK. Click for more!
Logistics & eCommerce News Update: June 27, 2020
Gayatri Bhaumik

By Gayatri Bhaumik

 

June 27, 2020

Welcome to our latest eCommerce and logistics news roundup!

This week, we’re discussing the launch of Amazon Shipping in the UK; looking at what increased cross-border shipping rates mean for American retailers; and debating whether air freight rates will continue their current downward trend.

And, in case you missed our last logistics roundup, you can still read it by heading over here!

Amazon Offers Courier Services in the UK

Amazon Shipping services

Retail giant Amazon has moved into courier services by offering Amazon Shipping services to merchants in the UK. Though the retailer already offers logistics through its Fulfillment by Amazon service, this new service is noteworthy because it will allow retailers to ship orders from their own external online stores and other channels.

The new service will offer parcel pick-up and delivery seven days a week throughout the UK. Merchants will be able to access very competitive rates through Amazon Shipping; they will also be able to cut shipping costs since the service won’t charge extra fees for residential delivery, peak periods, or weekend deliveries.

Easyship’s Take: This is good news for UK-based online retailers, who will now be able to access very competitive shipping rates through Amazon Shipping.

It must be assumed that the company has leveraged its large network to create a service that will be highly beneficial for retailers and customers. Additionally, the new service will push existing carriers like UPS and FedEx to up their game in order to retain their share of the shipping business.

But, it remains to be seen whether Amazon Shipping will play out well in the UK. Amazon had to suspend its shipping service in the US because it couldn’t keep up with the surge in customer orders during the COVID-19 pandemic.

US Retailers to Face Increased Cross-Border Rates from July 1

Many American shippers will face higher cross-border shipping rates from July 1 as a deal reached last year by the Universal Postal Union (UPU) allows countries to self-declare postal rates. Ahead of the implementation, USPS issued new contracts in late May to consolidators, postage sellers, and other cross-border service providers like DHL eCommerce, FedEx Cross Border, and UPs Mail Innovations.

The new cross-border postage rates will be a combination of three different services, namely, the domestic postal service in the country of origin; the foreign postal service in the destination country; and the handling cost of the service provider.

While rates and exact timelines are still not crystal clear, it’s been estimated that the USPS inbound rate from China will increase by at least 100%, while shipping costs from the US to Canada will be raised by about 50%.

Thus far, 31 countries have set reciprocal rates for US-based shipments. This has led to a less standardized global postage structure since some countries have based their rates on the weight of the shipment, while others are using a tiered per piece system.

Easyship’s Take: There’s certain to be a lot of confusion around cross-border shipping rates going forward as countries begin imposing new fee structures. But one thing’s for sure - American retailers can expect to pay significantly more for international shipping, and these costs may be passed on to the end consumer.

China-US Air Freight Rates Begin Falling from Pandemic High

The COVID-19 pandemic created major supply chain disruptions, leading to falling air capacity from China to the US, and a subsequent spike in air freight rates when Chinese manufacturing picked up again in March. Now though, these rates have finally fallen, giving retailers some much-needed relief. Air-freight rates on China-US routes reached a peak in mid-May but finally fell nearly 50% to $5.10/kg on June 15.

However, rates are still well above what they were a year ago, and will likely continue to remain so. Many airlines have pivoted their passenger flights to offer more cargo flights, which has helped lower air freight rates.

But, with very low demand for passenger flights expected to continue for some time yet, and the rising cost of fuel making cargo flights less profitable, experts are predicting that capacity and rates will continue to be an issue.

Easyship’s Take: Unfortunately, it looks like the havoc wreaked by the COVID-19 pandemic won’t be rectified any time soon. It doesn’t seem like airlines will be able to regain their passenger or cargo capacity to pre-pandemic levels this year, and that means air freight rates will continue to remain high.

Retailers should expect to continue budgeting for this, while customers should be aware that they will probably end up paying more for shipping as a result of all this.