The SMB shipping trap: Trying to go it alone

Small business shipping costs are climbing from four directions at once: tariff exposure, higher fuel, rising last-mile rates and carrier rule changes that arrive with little notice. Most of the shippers absorbing those increases do it without a trade compliance staffer or a dedicated logistics analyst on the payroll.

Tom Madine, CEO of ShipStation Global, said the reflex in that segment is to work the problem in-house. After 30 years in logistics, he calls it the most common and most expensive trap small and midsize shippers fall into. “What I think they try to do a lot of it on their own,” Madine told FreightWaves.

“That personality type sometimes says, ‘Well, I’m going to go out there and navigate all this on my own because I’ll do it better than someone else.’ And that’s where you can end up in an industry as big as ours, as complex as ours, as ever-changing as ours [getting into trouble].” The instinct is not irrational. It is how most of these companies got built.

It is also poorly suited to a cost environment where the variables reset quarterly. Uncertainty Is the New Certainty Businesses want predictability. They have not had it for a year and a half. “Businesses want certainty, right? That’s what they want and that’s what we’ve been lacking for the last 18 months,” Madine said.

Scale changes how a company absorbs that. Large shippers have the resources to model scenarios and staff the problem. The only thing they lack is turning speed. “It takes a lot now. If you’re a big company, you’re trying to move your supply chain, it takes a long time,” Madine said.

“I think small businesses, although they may not have the resources in-house to make big sweeping moves, they’re a lot more nimble. That’s the one thing about most of our smaller business customers. They’re still run by entrepreneurs. They’re really nimble.” Madine has watched the tradeoff play out inside his own company.

“I look at us today versus how we were 30 years ago: We were way more nimble 30 years ago, but we’re way more prepared to deal with things today,” he said. “Any business that’s thriving in this environment, they’re good at making change, whether they’re doing it in a structured way or they’re nimble.”

Why Small Business Shipping Costs Are Higher for Longer Not every cost pressure in the market is temporary, and Madine draws a hard line between the two categories.

“I think there are some structural changes in the transportation market that are occurring right now independent of tariffs, independent of the Strait of Hormuz and oil, independent of all that,” he said. “There are some structural changes going on in the world of freight where it’s going to be more difficult than it was for new capacity to come online.

So that means that we’re probably in an environment where the cost of transportation is going to be higher for longer.” That does not apply evenly across modes, but it does change the planning horizon.

The distinction is the whole exercise: While transitory shocks call for tactical adjustment, structural shifts justify rewriting sourcing and network strategy. “Should you make a change to your long-term strategy because of a six-month or eight-month short-term blip? No,” Madine said.

“Could you make a change to your strategy because of something longer-term and more structural? That’s when you make big strategic changes.” The Inventory Question Has No Single Answer Buy ahead of the duty and eat the carrying cost, or stay lean and pay the tariff later. Madine said the answer splits sharply on the balance sheet.

“If you’re a large business with a big balance sheet and you can afford to hold more inventory on it, that may be the right answer for you,” he said. “But if you’re a small business where cash flow is king, that’s not the right answer for you.” “Everyone always wants the one-size-fits-all solution, but they don’t exist.”

Smaller Shippers Are Not Shrunken Enterprises ShipStation Global serves more than 3 million customers worldwide, weighted toward small and midsize shippers. Madine said the most persistent misread of that segment is treating it as a scaled-down version of the enterprise.

“Most people assume that the needs of a smaller shipper are the same as the needs of an enterprise shipper. It’s just that the smaller shipper does less of it. And that’s not really the case,” he said. “Smaller shippers don’t have the same expertise in-house. They don’t have the same scale in their operations.

So they need solutions that can work with the resources that they have.” The mismatch shows up in the advice small shippers get. Madine pointed to one question that arrives constantly: Should we move volume to a regional carrier? “For some customers maybe the answer is yeah, that’s a good idea.

But for most of our customers: You’re not the right size business to do that,” he said. “Let’s look at some ways for your size business how you should fix this problem.” One Pane of Glass, or Seven Systems Visibility is the other gap. M