Self-reliant shipping to mitigate disruption risk in the direct-delivery channel: will the e-tailer’s bonded-warehouse channel also benefit?

Abstract

ABSTRACTCross-border e-commerce, in particular direct-delivery trade, has been severely impacted by turbulent events like the COVID-19 epidemic. E-tailers operating both bonded-warehouse and direct-delivery channels could mitigate disruption risks by self-reliant shipping to maintain control over logistics processes. The question is whether the e-tailer’s bonded-warehouse channel will also benefit from self-reliant shipping. We analyse a typical situation in which an e-tailer imports products from overseas suppliers and resells them through dual-sales channels. Our findings reveal that the demand potential difference between these two channels and the common carrier’s pricing power are critical factors in the e-tailer’s decision-making process. If the bonded-warehouse channel has moderate demand potential, the e-tailer is less likely to choose self-reliant shipping. Therefore, the imbalance in demand potentials between the two channels serves as a significant driver for the e-tailer to favor self-reliant shipping. Interestingly, we find the common carrier’s pricing power can either motivate or deter the e-tailer from self-reliant shipping. If the direct-delivery channel/bonded-warehouse channel has a large demand potential, a higher service price for this channel will be charged by the carrier, thus incentivizing the e-tailer to prefer self-reliant shipping. Our study also demonstrates that both self-reliant shipping and common carrier strategies can achieve a Pareto improvement in the e-tailer profit and the social welfare.KEYWORDS: Channel disruptionsupply chain resilienceshipping servicemaritime supply chaincross-border e-commerce AcknowledgmentsThe authors are grateful to the editor and reviewers for their helpful comments. Yiyuan Ruan is the corresponding author.Disclosure statementNo potential conflict of interest was reported by the author(s).Additional informationFundingThis work was supported by the National Natural Science Foundation of China (72125006, 72293564/72293560).