February 27, 2015 | Industry Insights

Burgeoning E-commerce Strains Logistics Industry

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Smaller logistics companies are having trouble keeping up with the boom in online commerce. While Asia looks at logistics as a prime opportunity for growth, developed nations, in particular the U.K., have seen a disruption in the traditional logistics sector that has led to the collapse of a record number of couriers and haulers.

Even though online orders grew 14% and fuel prices fell, overcapacity in the U.K.’s courier and hauler industry drove freight transport prices down. As a result of buyer appetite for speed in delivery and demands from manufacturers and distributors for processing of large volumes at high speed, the freight transportation and warehouse industries have been pressured to adopt sophisticated information technology systems that have the capacity to respond to pickup, delivery and tracking requirements.

Those without advanced IT capability have found, or will find, themselves unable to keep up – or catch up. Supply chains could be crippled not by weather or breakdowns or civil commotion but, rather, by simple traffic bottlenecks or IT insufficiency.

Accounting firm Moore Stephens says smaller logistics and delivery companies in the U.K. are failing because they have not made sufficient investment in their IT platforms and operations. Their business models may be outdated, and they are not flexible enough to meet the needs of e-commerce fulfillment. That pressure could push some logistics providers into new arenas, such as repacking returned items for resale or actual repair and return of goods for resale by the delivery company, Moore Stephens suggests.

Vulnerabilities in the supply chain due to a shortage of drivers, antiquated IT systems, traffic jams at warehouses and business insolvencies create multiple concerns for all those in the delivery line. Traditional supply chain insurance coverage may not suffice in many of these circumstances.

At Roanoke Trade, we consider your loss exposures in depth and understand the nuances of the industry that many freight delivery insurance brokers can miss. We provide all the standard cargo insurance and logistics insurance policies, but we also have access to specialty insurance that can meet the needs of freight carriers and the warehouse industry that fall outside the standard commercial property insurance policy.

We invite you to learn more about us, our experienced talent in this highly specialized area, our creative solutions, and the value we will bring to you and your clients. Please contact us at 1-800-ROANOKE.

Sources: CFO Innovation, Financial Times, Noodls

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