Shipping Remains A Significant Cost Of Doing Business

The concept of retail has at its basis the presentation of goods or services to a consumer base in the effort to entice the customers to make a purchase. In all the time that capitalism has been in effect, despite its many forms and regulations this basic tenet has not changed. What has made a significant change is the cost related to this shipping of products to retail facilities.

Adjusting the costs for inflation, a gallon of gasoline in 1970 would cost approximately $1.60 compared to its current price of over twice that. But more important than the outright cost of fuel is the inconsistency and inability to control that cost. Unlike most products that adhere to a supply and demand interaction with regard to price, fuel is unique in the introduction of international politics to the equation. In the early 1970s the so called oil crisis was not the result of inadequate supply, but a conscious decision by members of OPEC to reduce production and delivery to the US as punishment for American support to Israel.

But the cost of getting goods around is not exclusively due to the cost of transportation. Packages require packaging, and much of that is also dependent on the price of oil, so we have double the impact on business. But in addition to these costs, the size and geography of the US has always had an impact on delivering mail and packages.

The United States feeling about the delivery of mail and the importance of that process was immortalized by the efforts of the Pony Express which began in 1860. The task was difficult and fraught with peril. The recruiting effort of the founder, William H Russell left little doubt how dangerous the enterprise would be as he even suggested his preference to hire orphans for the job.

As things develop, the easiest methods were harnessed first, so people who lived in the cities began receiving official free mail service in 1863. It would be three decades before an organization representing the interests of the farming community could coerce congress into officially launching rural free delivery. But even this new service did not reach all Americans, the west was largely without service.

The idea of free postal service throughout the United States was egalitarian but in its practical execution it was expensive. There was considerable resistance to the notion for that expense and because the companies that made their living delivering mail to the farmlands believed it would destroy their business, stores in town feared it would reduce the number of visits by rural residents and would therefore decrease their market.

Rural free delivery, the meaning behind the letters in the TV show Mayberry R. F. D. Came to be synonymous for living in a distant isolated area. The notion of making postal delivery available to all was a grand one, but the cost of providing it would eventually catch up to the young nation who had to initiate postage stamps and compulsory prepayment to keep it.

Today we take the ability to transfer packages across the nation and across the globe for granted. We even have the ability to get things delivered throughout the US overnight and anywhere in the world in just a few days. This has allowed the process of doing business to become and remain truly international. But despite all our progress, it is folly to enter into any business with carefully assessing the cost related to shipping.

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