It is the peak season for cross-border shipping, and the volume of ocean freight shipments has surged. However, the strong demand has also led to a series of challenges such as tight shipping capacity, soaring freight rates, and port congestion. Especially under the impetus of the Red Sea crisis, the cross-border container shipping market has been in turmoil since the beginning of this year. Not only that, the continuous collapse of freight forwarders is also a thorn in the side of many cross-border sellers. Just recently, there was news in the industry that a freight forwarder in Yiwu collapsed and the person in charge absconded with 14 million yuan.It is learned that according to a large number of sellers and freight forwarders, a US freight forwarder in Yiwu, Xin*, was exposed to bankruptcy. The news claimed that a total of 17 containers under Xin* were seized by the US Customs, and the person in charge has now lost contact, suspected of running away with 14 million yuan. As a large amount of goods are involved, it may cause incalculable damage to the cargo owners. According to the on-site video released online, a large number of cargo owners and freight forwarders have come to the door to collect debts and defend their rights. ▲ The picture comes from the seller’s disclosure It is understood that the company's failure may be due to long-term low-price purchases in the market to attract customers, and then reselling at high prices to make a profit, which eventually led to a break in the capital chain. "Customers seem to have saved a few cents, but the losses range from tens of thousands to hundreds of thousands." Another victimized seller said that he had paid 6 yuan/kg for shipping during the previous transaction, but was now required to pay a redemption fee of 20 yuan/kg. Another freight forwarder revealed that the logistics company owed freight to many upstream dealers, resulting in a large number of cargo owners receiving notices to pay high redemption fees. According to public information from Aiqicha, Xin* International Freight Forwarding Co., Ltd. was established in 2021 with a registered capital of 10 million yuan. Its business scope includes international freight forwarding, road freight station operation, and international maritime freight forwarding. It is worth noting that the freight forwarding company was marked as operating abnormally because it "cannot be contacted through the registered residence or business premises". In addition, since 2024, it has been involved in three lawsuits on January 11, January 19, and March 21, all involving maritime freight forwarding contract disputes. A victim of the cargo has revealed that the legal person claimed that the person in charge, Zhang, had absconded with 14 million yuan in cargo payments, and that finding Zhang would solve the problem. However, judging from the company's operating information, Zhang's name did not appear among the major public shareholders. ▲ The picture comes from the seller’s disclosure As of press time, the freight forwarding company involved has not made an official response, and the person in charge is still out of contact. The search revealed that there is little public information about the company on the Internet, and its official website has not been found. This also serves as a wake-up call for sellers. When looking for logistics partners, they must carefully confirm whether they are formal and reliable, and at the same time, they must not be greedy for small profits, so as not to fall into the scam of buying goods at a low price and reselling them at a high price. This incident also shows that in the past two years, there have been many freight forwarding scandals. The reason behind this is that the industry is full of mixed fish and dragons, with frequent irregularities such as illegal declaration, delivery from distant warehouses to nearby warehouses, forged customs inspection forms, and regular express ships secretly transferring to ordinary ships. In particular, the COVID-19 bonus in 2020 stimulated the explosive growth of the cross-border e-commerce industry, and the strong demand also gave birth to a frenzy of container shipping market like a "sea money printing machine". However, as the wind receded and rationality returned, such a bubble boom also collapsed, and was replaced by a sharp drop in freight demand and freight forwarders looking for goods everywhere. To this end, more and more freight forwarders are engaging in low-price internal competition to occupy the price high ground, and even taking risks to enter the gray area in order to grab market share. Under such vicious competition, freight forwarding bankruptcies have become a high-frequency phenomenon. At this stage, cross-border e-commerce is preparing for the mid-year peak season, and the demand for shipments has soared sharply. However, the closer it gets to the big promotion, the more logistics challenges emerge. 1. Freight costs are skyrocketing On the one hand, affected by the ongoing Red Sea crisis and the US's imposition of tariffs, freight rates on multiple routes have continued to rise in recent months, with shipping giants such as Maersk, CMA CGM and Hapag-Lloyd disclosing price increase letters one after another. And just recently, a new round of price increase notices came again uninvited:- CMA CGM: Starting from June 20, a port congestion surcharge (PCS) will be levied to Dammam, Saudi Arabia, with a charge rate of US$300/TEU and US$600/FEU. Starting from July 1, the rate from China to West Africa will be adjusted to US$500/TEU
- Maersk: Starting from July 1, 2024, a peak season surcharge (PSS) will be levied from Chinese ports to Bangladesh, and a PSS will be levied from Asia Pacific to the United States and Canada. The charging standard is US$1,000 per 20-foot dry container and US$2,000 per 40-foot dry container/high container and 45-foot dry container.
- MSC: From July 1 to July 14, the uniform rate (FAK) from all Asian ports to Europe will increase to a maximum of US$9,800
2. Amazon FBA warehouse explosion As Prime Day approaches, Amazon sellers have significantly increased their inventory. As a result, since June, Amazon's multiple FBA warehouses have been frequently overstocked, and some popular warehouses have long queues and slow stocking efficiency. According to the latest notice released by the freight forwarder, the postponement of appointments for LGB8, GYR2, GYR3, VGT2, SMF3LAS1, and LGB6 in the West Coast of the United States is relatively serious, with the delivery time fluctuating from 4 to 6 days. The rejection rate of SBD2 has increased due to insufficient manpower. US-China FTW1, IND9, MDW2, and FWA4 are also affected by liquidation, with the time limit fluctuating around 5 to 8 days; US East CLT2, RFD2, RUD2, and RMN3 are affected by liquidation and the time limit fluctuates around 7 to 10 days. According to various sources, many FBA warehouses have frequently postponed or cancelled appointments, and delivery times have been severely delayed. Popular warehouses such as LAS1 and LAX9 are severely congested, and some warehouse appointments have even been postponed to mid-July or mid-to-late September. Other sources said that some warehouses have a rejection rate of up to 90%. 3. Customs inspection rate rises Behind the endless stream of freight forwarding defaults, the rising customs inspection rate is a major influencing factor that cannot be ignored. According to industry reports, the inspection rate of customs in various parts of the United States has increased sharply recently, mainly targeting vague and non-compliant cargo descriptions. It is reported that this is mainly due to the frequent detection of prohibited items and goods that violate declaration regulations in containers by U.S. Customs, including drug powder, incomplete cargo declaration, forged importers, and safety certification that does not meet regulations. Specifically, the number of inspections at the Port of Los Angeles has increased significantly, mainly focusing on issues such as cargo value and importers; Customs in Houston, New York, Atlanta and other cities conduct random inspections, mainly focusing on issues such as cargo value and safety certification. In addition, the U.S. Customs has continued to increase its inspection efforts for Type 86 customs clearances, requiring sellers to submit data sets when goods arrive to avoid having their goods seized or delayed. Overall, cross-border logistics is a major obstacle for sellers during the peak season every year. Frequent freight forwarding failures, continued skyrocketing freight costs, and various warehouse explosions have put extremely high demands on sellers' shipping plans.
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