For the past 25 years – with only a couple of notable exemptions – the world’s trading landscape has enjoyed the benefits of peace and stability. This tranquil commercial environment, however, gave rise to a commoditised logistics sector – where many of the services available from the major players are almost indistinguishable from the competition – and gargantuan companies came to dominate the space.
In the past few years, this has all changed.
To the east, wars in Europe and the Middle East and the ascendency of China have caused an array of global issues, while to the west, rapidly changing policies and legislation have compounded the challenges of trading with the world’s largest economy. When combined, these international factors represent a comet smashing the grip held by the behemoths in our industry.
In the face of such unprecedented upheaval, the evolution of smaller, more agile logistics partners – with their innate ability to adapt and change course with ease – provides answers and hope for retailers and consumers around the world.
The recent impact on consumers
The recent removal of de minimis exemptions in America – as an example of an unexpected global shift – is reshaping the landscape of international e-commerce, with its ramifications being felt most acutely by customers. Where shoppers once enjoyed the freedom to buy many items from anywhere, without having to worry about duty or import taxes, they are now encountering additional costs. Even small purchases are no longer exempt, meaning import duties apply to virtually all incoming packages.
A report from Reuters notes that the volume of de minimis packages entering the US approached 1.4 billion in 2024. Where these parcels, valued at under US$800, were exempt from duties, shippers must now calculate duty on almost every package entering the US.
This shift is creating a noticeable change in the customer experience, particularly depending on how duties are managed at the point of sale. When a retailer uses a Delivered Duty Paid (DDP) approach, all applicable taxes and duties are calculated and collected during checkout. While still adding significant cost to the end user, this offers a smoother, more transparent experience, with no unexpected charges upon delivery.
In contrast, when a shipment is sent Delivered Duty Unpaid (DDU), the burden falls on the customer to pay their fees when the package arrives – often accompanied by handling charges from local carriers.
Beyond the technical difficulties of meeting this the de minimis executive order, these changes represent a broader challenge where policies come into force that change established agreements and practices. When turbulence and uncertainty becomes the norm, it’s better to be highly reactive and nimble.
The importance of agility in today’s environment
There is a saying widely attributed to physicist Stephen Hawking that states, “intelligence is the ability to adapt to change” and in the face of such seismic global transformations, it’s become apparent that businesses must think smarter in order to survive, if not thrive.
Where size had been of great value in the logistics industry, it had often come at the expense of innovation and service improvements.
Historically, companies would grow based on innovation and offering something different – and better – than the competition. More recently however, growth has been achieved by acquisition and investment in new systems or technologies has fallen.
The consequences of this stagnation became particularly apparent with the recent removal of de minimis exemptions. Within days of the new regulations coming into effect, logistics customers were already facing higher costs, worsening service, and growing uncertainty. Why? There are many contributing factors, but one of the most significant is the inability of large companies to adapt quickly to changing circumstances.
Complex, Byzantine systems – often the result of merged legacy platforms and built around long-established processes – are notoriously difficult to change. These rigid structures leave large logistics providers ill-equipped to respond nimbly to regulatory shifts or customer needs, exposing their clients to operational disruptions and unanticipated costs. Conversely, smaller carriers tend to use more flexible systems that can be quickly adapted to changing circumstances.
This is particularly true when AI technologies are implemented. AI is proving to be the technology that can deliver this much needed agility, at the same time streamlining operational processes, making the whole end-to-end sequence less error-prone and ultimately more reliable.
The growing role of AI
Building smart infrastructure and improving operational systems is essential in the face of today’s challenges. AI offers a wealth of advantages in helping companies address both current and future issues.
From improving interactions with complex customs systems to making shipment data more accessible to customers, AI can streamline processes and resolve data inconsistencies. When properly trained, an AI system can automatically organise and consolidate shipment data from multiple sources – including emails, text messages, ERP, and TMS systems.
These tools not only provide customers with valuable shipment information but also help companies navigate the ever-changing legislative and regulatory landscape facing today’s logistics companies and retailers.
That said, it’s important to note that AI isn’t a universal remedy that will instantly fix the myriad problems facing the industry. Instead, it should be seen as a handy tool that, deployed correctly, can help well-trained, experienced team members to best accomplish their objectives.
AI can save time and improve agility, helping staff to apply their experience to more pressing matters, but it shouldn’t present an opportunity to replace valuable personnel.
By leveraging AI as a core part of their technical infrastructure – not just as an add-on -logistics providers can move from reactive problem solving to proactive decision making. Intelligent systems can forecast potential disruptions, flag compliance risks in advance, and dynamically adjust routing or documentation based on real-time data.
This kind of agility, which remains quite rare in the logistics sector, is no longer a luxury, it’s a necessity in a global environment where regulatory changes, like the removal of de minimis exemptions, can upend operations overnight. Companies that invest in smart, adaptive systems will not only improve service levels but also gain a competitive edge through resilience, speed, and agility.
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Author: Edward Hardy
