Global e-commerce trade held back by logistics costs, customs red tape

High logistics costs and customs clearance problems have hindered the growth of international e-commerce trade, said Tommy Lui, head of global freight management for LF Logistics.

Chinese e-commerce giant Alibaba is expanding its overseas markets, while American e-commerce giant Amazon wants to sell into China. The increasing pace of international e-commerce brings opportunities for logistics firms, including those in Hong Kong. But developing international e-commerce trade has been more difficult than in the domestic market.

"There are two key obstacles hindering international e-commerce. One is the difficulty in consolidating the parcels, and the second one is the problem arising from customs clearance," Lui said at a forum held by the Hong Kong R&D Centre for Logistics and Supply Chain Management.

The e-commerce boom on the mainland has been supported by low shipping costs. Mainland e-commerce platform operators and express delivery firms have been able to keep shipping costs low by consolidating parcels from different sellers, or for different buyers, during the shipping process. However, logistics service providers for the international e-commerce trade have not been able to do so, he said.

"If someone in China purchases goods from the United States online, it would be very expensive to ship just one parcel. But if the American company could collect orders from different Chinese buyers and ship the parcels in an entire batch, that could save a lot," said Lui.

However, consolidating parcels in international e-commerce trade is more difficult because customs authorities might worry that it would create loopholes for smuggling.