The delivery and courier industry plays an important role in the smooth running of a lot of different businesses, as well as being essential for individuals. While there have been countless successes in the sector, some logistics firms have been hit badly by the collapse of couriers and delivery companies.
There are many risks that could lead to financial problems for delivery and courier companies, that may see some of them forced to increase their prices. Here are some of the financial risks to delivery and courier services worldwide.
Shipment Delays
Shipment delays can cause a lot of problems for couriers and delivery firms. They will be held responsible by the client or customer at the receiving end if their order is late, which will often cost them money in two ways. Firstly, the courier may have to offer a refund or other incentive to make up for the delivery. Secondly, the company will likely lose any chance of that client’s returning business, which in the long term can be just as damaging.
Theft
The courier will be responsible for loss of items due to be delivered as well, and expected to cover the costs no matter how they go missing. It could be through incompetence, theft, natural disasters or other factors. Often couriers are carrying more expensive products, which makes them a target for thieves, so being extra vigilant is a necessity. Insurance is also required, to help cover any costs in the event of deliveries being lost.
Changing Consumer Habits
The demands of ecommerce have proven too much for a number of delivery and courier services, with the profit margins shrinking as they try to keep up with changing consumer habits. People are now ordering items from every corner of the globe and expecting them through the door as soon as possible, meaning many courier companies have had to invest massively. This is something of a gamble, which hasn’t always paid off.
Price Fluctuations
Increased competition between courier and delivery services has led many to drop their prices in order to attract business. For example, you can now send parcels to the US from a fraction of the price it cost twenty or so years ago. Yet with the speed and convenience many consumers now expect, it doesn’t always work out as a viable business model. Charging more can lead to loss of business, while less loss of profits, so finding the balance presents many risks.
Kidal Delonix is a contributor to Mr. Hoffman's blog. The views and opinions are entirely his/her own and may not reflect Mr Hoffman's views.
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