Millions of dollars in arrears in payments, the old freight forwarding company announced its bankruptcy!

In recent years, the freight forwarding circle has been in constant turmoil, and the term "thunderstorm" has frequently stung sellers' nerves.

The chaos of goods being detained, freight forwarders running away, and broken capital chains have become the norm. According to incomplete statistics from the industry, more than 70 freight forwarding companies have gone bankrupt due to operational problems in 2024, including many old companies that have been operating for many years. Recently, news of the closure of logistics companies in Dongguan, Hangzhou and other places has been reported one after another, once again exposing the cruel survival status of the industry.

It is learned that according to social media reports, Dongguan Hong** Logistics announced the disbandment of all employees and suspension of operations due to the fact that its cross-border sales had overdue payments of 4.28 million yuan for goods for half a year .

The dissolution notice exposed online shows that "the company has been in a loss-making state for nearly three years and is unable to continue. After careful consideration, it will stop closing all employees on February 28 and compensate each employee half a month's salary."

On the surface, it seems that the continued losses and the failure to effectively control the account period risk led to the company's capital chain breaking, especially in the context of a large cross-border seller's arrears of 4.28 million yuan in payment for goods, which eventually pushed the company to the brink of collapse.

But in fact, the collapse of Red** Logistics had already been foreshadowed:

According to public information, the operation of Hong** Logistics has obvious "high-risk" characteristics. Its unreasonable customer structure, uncontrolled account period management, and non-existent risk control system are the key causes of the bankruptcy .

Specifically, Hong** Logistics' business is too dependent on a few leading sellers, and its customer concentration is too high, so a single major customer's default can be a "killer blow" to the company. In addition, the company's payment period is generally long, resulting in an accounts receivable turnover rate far below the industry average, and cash flow has been in a state of "bleeding" for a long time. More seriously, Hong** Logistics has not taken out credit insurance and lacks effective risk control measures, which makes the company unable to cope with sudden risks.

Of course, the bankruptcy also exposed the high leverage operation problem of Red** Logistics. It is understood that Red** Logistics relies on loans to maintain cash flow and lacks sufficient liquidity reserves, which makes it difficult for it to survive the crisis once the capital chain breaks.

Coincidentally, Hangzhou Green ** Logistics, a well-known and long-established cross-border logistics company in East China, also suddenly announced the suspension of operations recently.

According to industry sources, the direct cause of the closure of Hangzhou Green ** Logistics may be the depletion of cash flow due to the seizure of goods and the arrears of freight. After the video of the empty office building was exposed, the company simply explained the reason for the closure as "poor business conditions."

The collapse of the above two logistics companies has undoubtedly sounded the alarm for the industry, and further demonstrated that the competitive environment in the cross-border e-commerce logistics market is becoming increasingly severe: issues such as the company's business model, risk control capabilities, and customer structure have become key factors in determining life and death.

In fact, affected by the epidemic, the cross-border logistics industry ushered in a wave of growth peaks in the past few years. Internet data shows that since the outbreak of the epidemic, the surge in cross-border e-commerce demand has driven the growth rate of cross-border e-commerce logistics companies to a new peak, with a growth rate of 12.03%. As of October 2023, the total number of cross-border e-commerce logistics companies has reached 156,719.

However, with the ensuing cost pressures, intensified market competition, and policy changes, especially under the heavy pressure of Trump's tariff policy, many small and medium-sized enterprises are struggling with cash flow and operational capabilities in order to cope with rising costs and a complex regulatory environment. As a result, they are ultimately unable to withstand the tremendous market pressure and have chosen to exit the market.

According to public data, the number of domestic freight forwarding companies that were deregistered and revoked in 2023 reached 44,600, a year-on-year increase of 10.4% from 2022. Although the specific deregistration rate in 2024 has not yet been announced, it can be inferred from industry dynamics that the clearance trend in the freight forwarding industry is still continuing. [ Want to enter the low-competition, high-profit market? Come to eMAG, with higher customer unit prices and lower traffic costs! 3.13 Shenzhen | eMAG platform super full guide! ]

In addition to freight forwarding bankruptcies due to poor management, some bad freight forwarders also take advantage of information gaps and industry loopholes to make ill-gotten gains through unfair means, causing huge losses to sellers.

It is learned that a seller recently revealed that a freight forwarding company used information asymmetry to mislead customers. The customer clearly requested air transport, but the goods were actually shipped by sea. In response to the customer's questioning, the freight forwarder argued that "the money was collected for sea transport" and then completely lost contact, did not reply to WeChat messages, did not answer phone calls, and completely ignored the customer's demands.

According to an analysis by a senior logistics practitioner, this is one of the "routines" commonly used by freight forwarding companies. Taking Canadian air delivery as an example, it is usually delivered by UPS or Canada Post. At the end of 2024, the Canada Post strike lasted for more than a month, during which UPS delivery was not affected. However, if the goods were originally selected by Canada Post and sent out before the strike, they will be stranded in the Canada Post warehouse after arriving at the port and cannot be delivered. Some unscrupulous freight forwarders saw this and believed that the Canada Post strike might last for two or three months, so they arbitrarily changed air transport to sea transport to reduce costs and earn the difference. Because whether it is air delivery or sea transport, the final delivery has to wait until Canada Post resumes work.

Another seller also shared his experience of being cheated by a freight forwarder. At the end of September 2023, the seller arranged to ship a batch of furniture to Canada. The goods weighed 2,322 kilograms and the freight cost exceeded 30,000 yuan. However, the goods have not yet arrived at the destination. During this period, the seller urged the freight forwarder many times, but the other party prevaricated with reasons such as "customs seizure" and "detention in overseas warehouses", and even told the seller that the goods had been returned.

The seller said angrily: "It has been more than a year, and I still don't know whether my goods were lost or destroyed. It is really infuriating! The freight forwarder has been asking me to wait and even suggested that I re-ship the goods, but there has been no clear response so far."

In addition, there are sellers who have encountered the bad behavior of freight forwarders misappropriating payment. According to the seller, he paid the freight in full, but after the goods arrived at the local warehouse, the freight forwarder refused to release the goods and even misappropriated the seller's payment. In the end, the freight forwarder signed a promissory note, admitting that it owed the seller 10,000 yuan, but has not returned it to date.

The seller said helplessly: "I found the freight forwarder on a certain book, but I had to pay the 10,000 yuan myself! It's so infuriating that I encountered scammers in business and had to pay for their mistakes!"

It is believed that the current chaos in the freight forwarding industry not only harms the interests of sellers, but also further overdraws the trust of the industry. Whether it is the lucky game of "air-to-sea" or the bad behavior of "missing" goods and misappropriation of payment, it exposes the irresponsibility and short-sightedness of some freight forwarding companies in their operations.

This not only brings economic losses, but also wastes time and opportunity costs. Especially in the context of increasingly fierce competition in the cross-border industry, any problems in the logistics link are like knocking down dominoes, bringing about a series of chain reactions, and the sellers are the ones who suffer the most.

Therefore, for sellers, only by raising risk awareness and choosing compliant partners can they protect their own rights and interests in the complex environment of cross-border logistics. [ Want to enter the low-competition, high-profit market? Come to eMAG, with higher customer unit prices and lower traffic costs! 3.13 Shenzhen | eMAG platform super full guide! ]