Interpretation of the small parcel dedicated line model
Parcels are subdivided into small parcels and dedicated lines. Small parcels, suitable for relatively small items, sent abroad by postal airmail service, can be called international small parcels. A dedicated line, refers to the line channel to a specific country, generally referring to the UK dedicated line, the United States dedicated line, and Germany dedicated line, there are air transport, sea transport, rail transport, and other transportation methods.
Market outlook for small parcel routes
The growth rate of the European and US e-commerce markets continues to slow, with high-value platforms performing significantly better than low-value platforms.
In 2021, under the impact of the European tax reform, Amazon’s closure, and eBay’s triple audit, coupled with the significant increase in air and sea freight rates and the impact of poor stability, the big sellers are divided, with sellers who have stronger control over the supply chain and higher brand premium capacity performing better. In 2022, a small number of sellers are looking for stability, while the majority of sellers are still looking for growth by expanding their platforms.
The compound annual growth rate of small package special lines and overseas warehouses in the next five years is about 20%-30%, faster than the overall market growth rate. According to the 2021 Ministry of Commerce Foreign Trade Report, cross-border e-commerce imports and exports grew by 20.1% year-on-year in the first three quarters of 2021. It is expected that by 2025, the compound annual growth rate of cross-border e-commerce B2C export transactions will reach 19%, translating into a compound annual growth rate of 15%-19% in logistics demand (logistics costs should be reduced as a percentage), of which the growth rate of the two sub-tracks of small package special lines and overseas warehouses will be faster than the overall growth rate of the market.
Advantages and disadvantages of small parcel routes
Advantages of small parcel routes
Compared with other transportation methods (such as EMS, DHL, UPS, FedEx, TNT, etc.), international small package service has absolute price advantages. The use of such shipping methods can minimize costs and enhance price competitiveness.
Compared with the postal service and international commercial express, the special parcel line has a faster time limit than the postal service. After the model was introduced, it quickly occupied the market and was favored by sellers. According to Ai Rui data, since the emergence of the small package special line model in 2016, it only took 3 years to take 30% of the market share of cross-border direct shipping logistics.
International parcels are convenient to deliver and send, and the billing method is unified worldwide, without counting the first weight and the renewal weight, which greatly simplifies the accounting of freight and cost control.
International parcels can deliver products to customers in almost any country or region of the world, as long as there is a post office that can be reached, greatly expanding the market space of foreign trade sellers.
Low financial pressure
Compared to the overseas warehouse model, the direct shipping model is a “lightweight” player, sellers do not need to prepare goods overseas, order and then ship them, reducing the financial pressure, and at the same time can test the product market response, to test whether the product has a “pop gene”.
Disadvantages of small parcel routes
Special line logistics regional scale are limited
As far as the export section is concerned, only a few popular regions and countries with greater demand for goods have dedicated logistics options, and the variety available is limited.
Transportation costs are slightly higher than international postal parcels
Small parcel line products due to professional, timely, freight costs are relatively higher than international postal parcels.
Special line logistics has a limited variety of consignable products
Although with the development of e-commerce, cross-border logistics product types are also growing, the current small parcel special line can be consigned on a limited variety of products.
Longer timeframe for direct shipments
In the case of unstable space during the epidemic, the China-US/Europe time limit is 8-15 days or even longer, and the unstable capacity may bring consumers a lower-than-expected logistics experience.
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