E‑commerce logistics costs hit USD 117.2 billion in 2017

E‑commerce logistics costs hit USD 117.2 billion in 2017

A report published Thursday by Armstrong & Associates, Inc. (A&A) estimates that e‑commerce logistics costs in the US hit $117.2 billion — representing 6.9% of total US logistics costs. The report, E‑Commerce Logistics in the United States, provides a deep‑dive into e‑commerce logistics in the US, with a focus on domestic and international transportation, warehousing and fulfilment, last‑mile delivery, and reverse logistics.

E‑commerce retail is no longer a novelty — it’s the new normal. The industry has shown significant and sustained growth. In the last five years, we’ve seen a compound annual growth rate close to 15%, and the industry shows no sign of slowing down.

The role logistics plays in e‑commerce retail can’t be overemphasised. Providing two‑day delivery for a seemingly endless assortment of products is no small feat. E‑commerce as we know it would not be possible without a vast, efficient logistics infrastructure. Logistics networks are quickly growing and changing to meet the ever‑higher bar set by e‑commerce retailers.

The e-commerce ‘extra mile’

We frequently talk about the ‘last mile’ in logistics, the short but costly final leg of a product’s journey. E‑commerce retail has taken this concept a step further. The shift from brick‑and‑mortar to e‑commerce retail has resulted in a such a significant addition to the typical logistics journey for retail products that we think of this as e-commerce’s ‘extra mile’.

The well-travelled path from distribution centre to store location is being replaced by a much more complex series of moves: from distribution centres to fulfillment centres to parcel hubs and sortation centres to last-mile delivery providers for residential delivery. As logistically complex product categories such as groceries and furniture make the shift to e‑commerce, the ‘extra mile’ is only becoming more cumbersome and costly.

E‑commerce’s ‘extra mile’ was previously travelled by someone else — the customer. E‑commerce retail has assumed an entire logistics step that had previously only existed on a very small scale. Logistics networks have undergone dramatic changes to accommodate e‑commerce, but the transformation is far from complete. We estimate US e‑commerce logistics costs will grow at a rate of 18.8% through 2020.

About the report

E‑Commerce Logistics in the United States is for logistics providers, retailers, investors, and researchers who wish to understand the massive shift in logistics networks supporting e‑commerce retail. Readers will gain an in‑depth knowledge of e-commerce retail’s impact on domestic and international transportation, warehousing, last‑mile delivery, and reverse logistics; key logistics cost drivers; major challenges and innovative solutions; and services and technologies provided by leading third-party logistics providers.

Topics include:

  • E‑Commerce Logistics Costs and 3PL Revenues for 2017–2020E.
  • E‑Commerce Networks, Transportation Logistics, and Domestic Transportation Management.
  • The Last Mile.
  • E‑Commerce Warehousing and Value‑Added Services.
  • Cross‑Border E‑Commerce Logistics and International Transportation Management.
  • E‑Commerce Reverse Logistics.

 Logistics providers, retailers, and technology providers are rapidly innovating to create tomorrow’s e‑commerce landscape. Ten ‘Focus On’ sections provide case studies or analyses of emerging topics, including:

  • Amazon Logistics (including our estimates for Amazon’s total inbound, outbound, and fulfillment costs).
  • Same‑Day Grocery Delivery.
  • Value‑Added Warehousing and Distribution Services for Beauty Products and High‑End Apparel.
  • Shifting International Logistics Networks and the Global Impact of E‑Commerce on Fast Fashion.
  • Seasonality Trends in Cross-Border E‑Commerce Logistics.

 

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