In recent years, as Amazon FBA continues to expand its market share in the European and American e-commerce markets, the cross-border logistics industry has also grown rapidly, with more and more capital, talent, technology and other elements pouring into the industry.
Most of the core links of cross-border logistics, such as customs clearance, warehousing, and delivery, are completed overseas. How to combine the export of China's business model with localized operations overseas is a realistic problem that many cross-border logistics companies have to face. Take the UK as an example. The UK has the most mature logistics system in Europe and the lowest cost. However, China's dedicated logistics companies in the UK are still not doing well. The fundamental reason behind this is that the European destination port agents are "lagging behind". According to Mark Lin's personal experience, the logistics operation process at the destination port is nothing more than the following simple steps: customs clearance - picking up goods - unpacking goods - distribution . It will also be accompanied by inspection and other value-added services. It looks simple but there are huge pitfalls hidden at every step. Mark Lin found that most freight forwarding companies are very obsessed with European customs clearance companies, thinking that they can rest assured if they find a European customs clearance company. But in fact, customs clearance companies are the simplest and least competitive link in the entire cross-border supply chain. There are very few customs clearance companies that have their own fleet or bonded warehouses in the UK . Customs clearance companies are asset-light operations and need to rely on heavy asset companies such as fleets and bonded warehouses to complete customs clearance services. Customs clearance companies can only strengthen the regulation of customs clearance service levels , but they basically have no control and supervision over third-party fleets, bonded warehouses and the entire cross-border supply chain . Not to mention the high storage fees or some simple value-added services such as labeling and detaining goods if there is an inspection . Customs clearance in Europe is mainly divided into two categories: direct customs clearance at airports/ports and customs clearance at bonded warehouses After going through the darkest moment, everyone should be able to reach a consensus: e-commerce goods must enter the bonded warehouse for customs clearance. E-commerce goods have two major characteristics: multiple orders and a wide variety of categories . Therefore, if one of the bills is inspected during customs clearance at the port, the entire container will be detained at the port, which will basically result in a delay period of 1-2 months. Freight forwarding companies are still haunted by the incident of sellers blocking their doors with banners. If you choose a bonded warehouse for customs clearance, the entire supply chain is completely decided by the bonded warehouse, such as when the bonded goods are pre-entered, when the goods can be provided, when to pick up and unload the cabinets, and how to ship out of the warehouse, etc. There are three main elements for customs clearance: product name, declared value and declared trade terms. Product name: determines the tariff rate and VAT rate of the product. Declared value: determines the tax you need to pay. Declaration method: Determine whether there is toll tax VVA. Since a large proportion of customers pay their own taxes, the UK is relatively formal compared to the whole of Europe. C88/DTI-H2/E2 Main three elements: Entry Number: Import declaration number Taxes: Customs duties + import VAT Route: H Preparatory customs clearance, 1 Document inspection, 2 Unpacking inspection and 6 Release Every seller or freight forwarding company hopes to see Route 6 release all the way and normal circulation. However, the reality is still quite cruel and is often accompanied by inspections: such as under-declaration, document compliance, product quality issues, destruction, return, high storage fees, and a series of subsequent disputes. Due to limited space, Mark Lin will not explain them one by one here. Most freight forwarding companies have the same question: why can't they pick up the containers immediately after they arrive at the port , and sometimes they don't pick up the containers for more than ten days. The promised 7-day delivery has become a distant prospect. On the one hand, they have to face the ruthless urging of domestic customers, and on the other hand, they have to pay the extra demurrage fees. There are objective uncontrollable factors and subjective helpless factors that cause this. Objective uncontrollable factors When a ship arrives at a port, it needs to declare the entire ship and all the containers to the customs, the terminal needs to unload the ship, and the shipping agent needs to release the containers to the freight forwarder according to the bill of lading, all of which takes a certain amount of time. Delays in shipping schedules may even cause the terminal to unload half of the containers, and the ship needs to rush to the next port to load the containers, and then come back to unload the remaining half of the containers. Due to bad weather , the terminal is closed and cannot unload the ship normally. Previously, the British Port of Frixtowe was delayed due to the upgrade of the terminal system. These are all force majeure factors. Subjective helplessness factor To pick up and return containers at UK ports, you need to make an appointment in the port VBS system. If you miss the appointment time, the fleet company will also face a fine. Therefore, hundreds of logistics companies make appointments for container pick-up times before tens of thousands of containers arrive at the port every week, such as 5:00am-7:00am, because this way they can unload the containers immediately when the warehouse staff go to work at 8:00am, and for long-distance transportation, they can avoid the morning rush hour traffic jams. The same is true for returning a cabinet. Everyone hopes to return the cabinet between the normal 8:00-17:00 time period, and it also needs to coincide with the time of picking up the cabinet. In this way, you can pick up a cabinet at the same time as returning the cabinet to reduce costs. Therefore, larger fleet companies have dedicated people responsible for scheduling the pick-up and return of cabinets. If the appointment is late, it will disrupt the plan for the week and the work schedule of the warehouse staff. If a logistics company in London is 100 kilometers away from the Southampton port, which is about a 90-minute drive. The normal warehouse working hours are 8:00-17:00, so the driver needs to leave London at 4:00am---make an appointment to pick up the cabinet at 6:00am---and then return to the warehouse at 8:00am---normally Amazon cabinets take 4 hours to unload at 12:00---arrive in Southampton at 14:00 to return the cabinet---make an appointment to pick up the cabinet at 15:00---arrive at the warehouse at 17:00. A total of 400 kilometers are driven, and the driver's working hours reach the maximum requirement of 9 hours per day for European drivers. All of this is based on the premise that the time for picking up and returning the containers is perfectly booked, there is no traffic jam on the road, and the containers can be picked up and returned smoothly at the port. If there is a problem in any link, the entire plan may be ruined . In addition to the fuel cost and driver salary, the vehicle wear and tear will increase invisibly, and the entire logistics cost will rise. Of course, the London logistics company can find a local fleet company in Southampton to arrange for the pickup of the cabinet, which can save some return costs. However, at present, the fleet and warehouses in the two largest ports in the UK, Freight Forwarding and Southampton, are in short supply, so the stability of timeliness cannot be guaranteed, especially during the peak season. At the same time, in order to maximize the profit of each vehicle, the fleet company will adjust the time of picking up the cabinet and returning the cabinet, so it is impossible to guarantee the cabinet to be picked up at the first time. Because the time for picking up and returning containers is limited by appointment, unlike air transportation, which only needs to pick up goods, the bonded warehouse for sea transportation can cover air transportation, but it is difficult for the bonded warehouse for air transportation to cover sea transportation. This shows one of the core factors of logistics: location. London is only 100 kilometers away from Nan'an Port, but it still faces such a big challenge, not to mention Birmingham and Manchester City, which are 240-300 kilometers away. Therefore, the geographical location must be considered as a key factor when choosing an agent. Another subjective and helpless factor is the unloading speed , which directly affects the turnover rate of the cabinet. We will further analyze and discuss this part in the following bonded warehouse and distribution sections. Currently, the storage fee of bonded warehouses in the market is 15-20 times that of ordinary warehouses, and is generally charged on a per-cubic-meter-per-day basis. In addition, the enforcement speed in Europe is at least 2-3 weeks , so the market has given bonded warehouses a very fashionable name: "Hermes Warehouse". When FBA logistics first emerged, people didn’t know much about bonded warehouses. Most of them were shipped to Chinese warehouses in Europe after customs clearance at ports. The price, timeliness and additional value-added services were all acceptable. However, as customs have increased the probability of inspecting e-commerce goods in recent years, mainly involving low declarations and compliance inspections of products by the Quality Supervision Bureau, people have begun to choose bonded warehouses for customs clearance. Due to the high storage fees and almost no services in bonded warehouses , many domestic freight forwarding companies rushed into the shipping market with great enthusiasm in the early days, but left the market in a few months. Now the remaining logistics companies in the market are accustomed to falling into pits, but it is difficult to grow bigger and stronger by relying on the existing bonded warehouse resources. So what exactly causes the high costs of bonded warehouses and why is there no worst, only worse service? The core reason is the market where supply exceeds demand. This is also a microcosm of the current status of the number of bonded warehouses in major European ports. In a nearly monopolized market, the service quality of bonded warehouses may not be worth talking about, so everyone can only wish for the best. The attitude of these few bonded warehouses towards FBA cabinets is: it’s tasteless to eat them, but it’s a pity to throw them away. E-commerce has many separate tickets and the goods are mixed, which also makes it impossible to pack pallets in China, which causes a great loss of container space. Therefore, the current FBA cabinets in the market are mainly loose boxes . Because when unloading, it is necessary to sort the goods according to the marks (trademarks) of each box, which will increase the difficulty of unloading in the bonded warehouse. According to our experience, unloading an FBA cabinet weighing an average of 15-20kg/700-800 cartons requires 3 people (2 unloading and 1 forklift operator) in about 4 hours, which is enough to unload 4-5 palletized traditional LCLs or 2-3 traditional single-item bulk containers. The more FBA cabinets there are, the more resentful the lower-level employees will be , and they will vent their resentment on the goods, which will lay the groundwork for the loss of goods later . It will also increase the difficulty of managing employees in the bonded warehouse and delay the unloading progress of other traditional cabinets. Among the already few bonded warehouses, half of the busier ones simply refuse to handle FBA containers . Even the remaining less busy ones will definitely not give priority to picking up FBA containers during the peak season or when they are relatively busy . This will result in the containers not being picked up for more than ten days after arriving at the port. Bonded warehouses in the UK generally have their own fleets, and the operating costs of fleets are much higher than warehouses . Therefore, bonded warehouses in the market attract customers by offering relatively low unloading prices, hoping to make profits from the fleets. However, due to Amazon's appointment restrictions, their fleet plans are disrupted by weekends, non-working hours, or temporary cancellations. The customers entering the bonded warehouse are basically DPD or the Haika Alliance, which mainly provides bulk hauling services . This makes the bonded warehouse even more depressed. After working so hard for DPD and other Haika Alliance fleets, it is difficult for the bonded warehouse to get too much fleet distribution profit from the FBA cabinets. Bonded warehouses without fleets have even more limited profit margins, because the entire supply chain profit is taken away by customs clearance companies or DPD account agents . Bonded warehouses do the most tiring and difficult work, but have the lowest profits. This is also the fundamental reason why FBA cabinets are not well received by bonded warehouses and do not perform well. Many Chinese agents in the UK or domestic logistics companies do not have enough professional knowledge and are not particularly familiar with the operating procedures of European bonded warehouses. As a result, when giving instructions to bonded warehouses, they are not particularly clear and do not follow their normal procedures. This greatly increases communication costs and makes it easy to lose goods. The bonded warehouse entry and exit will not be based on FBA order numbers, DPD, Haika or delivery addresses, but on UCN. If you encounter some experienced operators, they will help customers to convert. If the experienced operators are on vacation, it will lead to a situation where the two sides are not in the same place, and the bonded warehouse will not respond to you. Most agents will encounter a situation where they don’t pick up the containers for more than ten days, and finally pick up the containers but are stuck at DPD pickup , because DPD loading is very troublesome and it usually takes 1 to 2 hours to operate a vehicle. If there are more DPD pickups in a day, the warehouse entrance will be blocked, and the bonded warehouse will not be able to provide services for traditional containers. Therefore, many bonded warehouses control 2 to 4 DPD pickups per day, which means that they can only handle 1 to 2 FBA containers per day. This is why many domestic agents will encounter various problems in bonded warehouses after handling more than 10 containers a week, and their scale will be limited, so the development of domestic agents cannot be expanded. The delivery methods for FBA cabinet destination ports include delivery by DPD and UPS packages, delivery by pallet alliances such as Pallet Line and Pallet Way, and full truck delivery scheduled by Amazon. Due to Amazon's delivery reservation restrictions, such as the inability to make reservations during normal working hours, temporary cancellation of reservations, long waiting times at Amazon warehouses, etc., it is not possible to make good use of the UK's local fleet resources. Therefore, FBA cabinets are mostly delivered by DPD/UPS parcels and bulk haulage and sea truck alliances. Parcels: Currently, the UK mainly uses DPD and UPS. Most logistics companies have a lot of trouble arranging DPD or UPS to pick up goods at bonded warehouses. DPD loading is troublesome and bonded warehouses do not have much profit. Secondly, DPD/UPS picking up goods does not follow the normal process of bonded warehouse delivery. The normal bonded warehouse process is that the driver needs to pick up the goods at the bonded warehouse at the specified time with the pick-up documents such as UCN and password , so as to avoid excessive congestion at the bonded warehouse entrance. If the DPD/UPS driver does not arrive at the bonded warehouse within the specified time and the driver does not carry any pick-up documents, the bonded warehouse will not be able to release the goods to DPD/UPS. As more FBA cabinets are processed , bonded warehouses gradually accept DPD's pick-up method without documents. Generally, bonded warehouses will release all goods to DPD. However, this will cause another problem: bonded warehouses cannot track goods that have not been picked up by DPD. Generally, one container of goods requires about 1.5 DPD trucks to pick up the goods, which means two DPD trucks are too many and one DPD truck is not enough. If the bonded warehouse releases all the goods, the bonded warehouse system cannot track the goods that have not been picked up. It is assumed that the DPD has already picked up the goods, which will cause the goods to be left in the warehouse or loaded on the wrong truck. Many people in the market complain about DPD losing goods. In fact, most of the problems are caused by mistakes in the bonded warehouse outbound delivery, especially those who have both DPD and Haika Alliance in one container are more prone to errors. Due to the monopoly of bonded warehouses, many logistics agents are helpless, and finally DPD has to take all the blame. In addition, in order to reduce costs, more and more agents in the market will have some general agents open DPD accounts, regardless of the subsequent pickup and delivery. This will cause many logistics companies to be unable to dispatch vehicles from DPD headquarters to pick up goods, and bonded warehouses will not arrange DPD to pick up goods. At the same time, DPD goods in bonded warehouses cannot be shipped out. If goods are lost, it will be more difficult to communicate with DPD to resolve the problem. Therefore, the market complaints about DPD are getting more and more serious, so it is no problem for DPD to take more blame. Haika Alliance delivery: Generally more suitable for multiple Amazon warehouses that are not enough for a full truck delivery method, the price is between DPD and full truck delivery. Every region has a franchisee of Haika Alliance, which is generally a relatively large local fleet company . The fleet company picks up all the goods locally and delivers them to the franchisee transit warehouse in the delivery area that night, and finally the transit warehouse delivers them to the designated place.(Full tracking of Haika Alliance delivery + POD) For example, when delivering BHX4 in Birmingham, UK, the Southampton Seacar Alliance Fleet Company will pick up all the pallets that need to be delivered to the Birmingham area the next day, and deliver them to the transit warehouse of the Birmingham Seacar Alliance that night, and then the transit warehouse will make an appointment with Amazon to complete the delivery. Generally, the Pallet Alliance and Amazon have fixed delivery windows, and delivery can be completed in 3-5 days. Some better service providers can track and download POD throughout the process. Of course, each pallet alliance and each local franchisee are different, so the services are also different. Full truck delivery: Although a full truck can deliver 26 pallets, which is the lowest cost of all deliveries, there are also many uncertainties , such as Amazon's temporary cancellation of the appointment resulting in double delivery fees, waiting costs for unloading, delivery costs during non-working hours, and storage costs caused by the inability to schedule Amazon delivery time.(Full truck delivery + full tracking) The European Ministry of Transport has very strict control over fleet transportation. Drivers need to punch in as soon as they get on the bus. They cannot work more than 9 hours a day . Overloading will lead to violations of the law. The fleet operating license of the relevant company and the driver's truck license will be at risk of being revoked. This also leads to high operating costs for the UK fleet, such as driver wages, insurance, vehicle maintenance, depreciation, etc. The annual operating cost of a vehicle is about 1 million + about 3.5 yuan per kilometer of fuel. Most British logistics companies do not make a profit in the outbound delivery, and their profits come from the return cargo. Because the delivery time of Amazon's distribution warehouse is often postponed to weekends or nights, and drivers need to wait for several hours at the door of the Amazon warehouse to unload the goods from time to time. This often causes drivers to wait for several hours a day and cannot complete the return delivery. Therefore, a large part of the fleet companies in the market do not deliver to Amazon warehouses. Even if some logistics companies in the market have fixed windows to Amazon warehouses, they cannot meet the market demand. If the goods are cleared at the port and pulled to their own warehouses, it is easier to handle, but if the goods are picked up and delivered by a third-party fleet in a bonded warehouse, it is a lot of tears. Although the bonded warehouse cannot deliver goods by itself, the bonded warehouse staff will certainly not let the third-party fleet pick up the goods comfortably. The bonded warehouse staff will often ignore and deliberately delay the time. Therefore, most Chinese agents let the bonded warehouse deliver the goods to their own warehouses, and then arrange for the third-party fleet to deliver them, which invisibly increases the delivery cost. If Amazon's appointment time is not smooth or Amazon's warehouse is overwhelmed, it will cause the Chinese warehouse to be overwhelmed, and the service capacity will be limited.
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