Self-Reliant Shipping to Mitigate Disruption Risk in the Direct-Delivery Channel : Will the E-Tailer’s Bonded-Warehouse Channel also Benefit?

Turbulent events such as the COVID-19 pandemic have caused severe disruptions to direct-delivery trade in cross-border e-commerce. For the e-tailers operating both bonded-warehouse and direct-delivery channels, self-reliant shipping will undoubtedly avoid the loss of control of logistics processes so the disruption risk in the direct-delivery channel will be mitigated. The question is whether the e-tailer’s bonded-warehouse channel will also benefit. We therefore investigate an e-tailer’s choice between self-reliant shipping and common carrier strategies by considering the coordination of its two channel’s profit gains and disruption management. We find that the demand potential of the bonded-warehouse channel and the common carrier’s pricing power hold the key to the e-tailer’s decisions. With a moderate demand potential of the bonded-warehouse channel, the e-tailer is less likely to choose self-reliant shipping, so the unbalanced demand potentials in these two channels serve as the important 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, the carrier will charge a relatively high shipping service price for this channel, and the e-tailer will be motivated to prefer self-reliant shipping. We further show that either the e-tailer’s self-reliant shipping or common carrier strategy is capable of achieving the Pareto improvement of the e-tailer’s profitability and social welfare