Another Shenzhen freight forwarder facing financial crisis?

“There are frequent freight forwarding defaults every year, and this year there are still the same number.”

In the cross-border industry, the collapse of freight forwarding companies is a high-frequency event. The collapse of multiple freight forwarding companies has caused sellers to worry about the number of orders while also being wary of problems with the transportation of goods.

"When the freight forwarder has problems, I am left to wait for the goods to be put on the shelves. Sometimes I even have to pay to redeem the goods..."

A freight forwarding company in Shenzhen is stuck in a business quagmire

Last week, Shenzhen Rui* International Logistics Co., Ltd. issued a situation notice stating that due to increasing losses and insolvency, it was unable to repay the money to its cooperative suppliers, and in order to save costs, the company would move away from its original address.

In its situation notice, Shenzhen Rui* International Logistics Co., Ltd. explained the reasons for its losses, namely: 1. Cross-border cargo volume has declined since the beginning of this year ; 2. The company has fallen into a serious triangular debt dilemma and accounts receivable have not been recovered in time; 3. After experiencing risks in the European and American markets, there is little profit left.

Shenzhen Rui*, which was involved in last year's European inspection and this year's U.S. financial account verification, is now suffering heavy losses and insolvent. In order to reduce costs and repay debts as soon as possible, it has to move away from its original location.

Compared with the previous "runaway" operations of freight forwarders that went bankrupt, this company behaved more responsible and stated that it is still operating. If the cooperating supplier agents can no longer wait for repayment, they can resolve the issue through legal means, but they still hope that everyone can give it more time.

Tianyancha information also shows that the company is still in existence. Yien.com also learned that Shenzhen Rui* was established not long ago, on July 21, 2020, and is only a few days away from its 3rd anniversary.

At the same time, it also carries a legal risk. Last year, an engineering technology company in Suzhou took the company and its legal person to court over a transportation contract dispute.

In the statement of facts issued, Shenzhen Rui* reminded its partners to keep the situation confidential to avoid any adverse effects, probably because they were worried that too much negative voice would affect subsequent operations.

Freight forwarders are scrambling to get goods, and " 0 yuan goods grabbing " is common

Shenzhen Rui* mentioned above that one of the reasons for the loss was that "the volume of goods could not be increased."

This is not just an isolated case. The current export market is performing poorly. Take the United States, the largest cross-border market, for example, where container throughput at many ports is still declining.

In June , the container throughput of the Port of Los Angeles was 833,035 TEUs , the best performance since July last year, but still down 5% from the same month last year , with import containers down 34% .

In the first half of this year , California port throughput fell 24% compared with the same period in 2022 , while the Port of Long Beach fell 25.5 %.

Statistics from Descartes Datamyne show that in June , container exports from Asia's top ten economies to the United States reached 1,473,191 TEUs , down 13% year - on-year , continuing an 11-month downward trend.

Among them, exports from mainland China , including Hong Kong and Macao , fell 17% to 844,700 TEUs , marking the tenth consecutive month of decline .

In terms of data for the first half of the year ( January-June), Asia exported 8.17116 million TEUs of containers to the United States , a year-on-year decrease of 21.8% , while China's exports to the United States fell 25% to 4.652731 million TEUs .

Earlier, a freight forwarder told Ennet that its company's cargo volume has dropped by about 50% since the beginning of this year.

The overall cargo market is tightening, and this tightening trend is still intensifying, which unsurprisingly has led to fierce competition in the industry.

In order to attract more customers, freight forwarding companies offer prices that are "rolling into the center of the earth", with prices as low as "0 yuan".

"The freight forwarder I cooperated with previously posted a limited number of '0-yuan shipping' offers on WeChat Moments. This was either to fill up the cabinets or because they had sensitive goods that needed to be shielded at customs. If we really cooperated, my goods would also be implicated if they were found out. I can't take advantage of this kind of deal casually," a seller told Ennet.

" I dare not cooperate with any freight forwarder who offers a 'free delivery' method . Even if I pay, I cannot guarantee that my goods will arrive smoothly. If something happens to them, my goods may still be floating on the sea and I won't be able to find them. "

Sellers are very wary of "zero-dollar shopping". After all, "unprofitable" business does not fit the characteristics of businessmen. "There is no free lunch in the world", and the invisible hidden costs are what sellers cannot afford.

Freight Forwarder Blacklist is frequently updated, making it hard for sellers to guard against it

Some sellers believe that they cannot cooperate with freight forwarding companies that offer "0 yuan cargo collection" services.

In the cross-border circle, there is also a "freight forwarder blacklist". Sellers who share information avoid freight forwarders on the blacklist and look for safer ones to cooperate with. After all, no one wants to lose goods before they are put on the shelves, and do not want to suffer a loss in vain.

However, the high frequency of updates on this blacklist also shocked sellers. "I was smug about my luck and found a decent freight forwarding company, but I didn't expect to find it on the list the next second. Even the leading companies can run away."

The recent bankruptcy of Shenzhen Express caused a stir in the cross-border circle. As a leading freight forwarding company, many sellers entrusted their goods to it for shipment to overseas markets. However, no one would have thought that such a well-known company would collapse and even tell some sellers that they had to pay money to redeem the goods .

Since its collapse, news of other freight forwarding companies’ collapses in the industry have been pouring in.

In June, freight forwarding companies such as Kaiqi, Newcool, and Lianyu issued denial statements in succession regarding the news of the bankruptcy, saying that the news was the result of their peers abandoning their competitive bottom line and maliciously snatching customers.

In July, Blue Mart was reported to have used a UPS account and posted false shipping labels, which led to the seizure of goods from multiple sellers . However, it later said that these were all false statements and would be handed over to the legal team to take screenshots for evidence. It also called on its peers to operate in compliance with regulations, compete rationally, and not use improper means to disrupt market order.

Whether it is Kaiqi, Newcool, Lianyu, or Lanmart, they all tend to attribute the spread of these statements to unfair competition by their peers. We don’t know the truth. However, the "stability" and "security" of the freight forwarding industry have always been controversial among sellers.

“——Are there any freight forwarders that can be trusted in the cross-border circle?

——In the past, I didn’t need to worry about delivering goods to freight forwarders. Later, freight forwarders were always skeptical. Now, I feel that every freight forwarder has the word "unreliable" written on their face.

——What is more terrible than no orders and no profits is to encounter unreliable freight forwarders. The former is a natural disaster, and the latter is a man-made disaster, which can obviously be avoided.

——Who can clean up the freight forwarding circle? There is a sudden collapse every few days, and people are terrified when shipping goods.

——The freight forwarding circle is too chaotic, the service quality is uneven, and there are a lot of after-sales problems.

..."

Sellers have stepped on the landmines of freight forwarders, even more than once. For them, if the freight forwarder has problems, the goods face huge arrival risks, and they cannot be put on the shelves in time. Then the store that has worked hard to run will suffer the consequences of being out of stock and removed from the shelves, not to mention the energy spent. The various economic costs alone are not a small amount.

Freight Forwarding

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