During the height of the COVID-19 pandemic while e-commerce surged, small businesses struggled to find capacity to ship their goods as logistics companies had all the power. Today however, there is more than enough capacity with transportation providers being overbuilt, and now finding themselves needing to “right size” their operations. As a result, they will try and sell the excess capacity, which will be a disruptor in the marketplace.
In an environment of reduced volumes, there’s an opportunity for small businesses to drive down their costs and ensure reliable delivery of their products by diversifying their carriers. But unlike larger shippers that have multiple carriers and can use whichever one is best depending on the location (and also get cost advantages), small businesses don’t have the volume required to diversify carriers. There are however different ways to tackle this issue.
Helping small businesses to diversify carriers
There are more than 33 million small businesses in the U.S. and the market has its own attributes. When it comes to shipping, small businesses typically require more affordability, reliability, and flexibility to meet customers’ rising expectations, especially in the e-commerce age. They also need a shipping partner they can trust and can help to insulate them during this time of disruption.
Over the past year and half, asset light carriers have emerged in the U.S. to level the playing field for small businesses. For example, Sendle taps into big business delivery networks and makes them available to everyone. Rather than putting more trucks on the road, Sendle makes use of wasted space in existing delivery trucks, maximizing the efficiency of all of those shipping routes. Sendle also helps to shield small businesses from the chaos in the market by handling the end-to-end journey of every parcel shipped.
New revenue stream for carriers
The upheaval in the shipping industry will not only help small businesses to save on costs, but also offer regional carriers an opportunity to partner with asset light carriers to provide a safe haven to small businesses. These partnerships can help regional carriers access a niche, untapped market and create a new revenue stream as small businesses continue to be a growth driver. Asset light carriers like Sendle that are focused on small businesses, can help shippers with customer acquisition, support, and billing, and they don’t have to deal directly with end customers.
The key to maximizing this growth opportunity for regional carriers is to choose an asset light carrier partner that understands the small business market and can bring in customers. Asset light carrier partners should understand the specific attributes of small businesses to efficiently match the right shipping provider to the right shipper. Effectively matching supply and demand creates efficiencies which benefit all parties. In addition, the innovative asset light carrier model of using trucks already on the road is an additional differentiator that will help attract small business customers as they increasingly move toward offering “green” products and want to use shipping services that support their brands.
While the shipping industry is seeing turbulence, the era of reduced volumes creates an environment where the small business market can more effectively compete against larger shippers. In turn, the support they require to make their success a reality, offers new revenue growth opportunities to those carriers using innovative solutions, and partnerships to shield small businesses from the disruption.
Dennis Oates, Chief Logistics Officer, Sendle