Another freight forwarder went bankrupt? The protagonist responded urgently

Another freight forwarding company in Shenzhen went bankrupt?

The collapse of Shenzhen Express seems to have triggered a "switch". Less than half a month after the incident, the industry has heard that four freight forwarders, including Kaiqi, Newcool, and Lianyu, will also collapse. Although these companies have successively issued statements to refute the rumors and strongly denied them, similar news has not stopped. Recently, the industry has heard that Shenzhen's "Lan Mart" has also collapsed.

In fact, the reason behind these freight forwarding failures and rumors of failures is that the industry competition is becoming increasingly fierce. At a time when cargo volume is shrinking and freight rates are falling sharply, freight forwarders have repeatedly played the "low price" card in order to attract more customers. There is even a situation of "receiving goods for free" in the market. This competitive method that makes sellers can't help but call it "crazy" not only buries the risk of failure for freight forwarders, but also deepens the concerns of sellers.

Blue Mart crashes? The protagonist issues an emergency statement

The collapse of Express Ship triggered a major earthquake in the cross-border circle. Sellers were worried that the freight forwarders they were working with would become the next “Express Ship”, so the news of the collapse of “Blue Mart” spread very quickly as soon as it appeared.

A video that was suddenly circulated in many social networks in the industry showed that in order to boost performance and profits, Shenzhen Lan Mart used UPS's account number and affixed false shipping labels, resulting in the goods of many foreign trade companies being seized by UPS and unable to be retrieved, causing losses of up to one million. However, Lan Mart felt that this was not their responsibility and refused to compensate, causing many foreign trade companies to lose customers, and the stores that had worked hard to operate were out of stock and taken off the shelves, returning to the pre-liberation era overnight.

The video posted multiple screenshots of chats and emails, and the seven big words on the cover, "Lanmart is suspected of fraud," irritated the sellers' sensitive nerves:

“——Again, are there any freight forwarders you can trust these days?

——Another financial crisis. In this environment, can cross-border e-commerce still be carried out?

——I have to go and see where my goods are, and have a chat with the freight forwarder.

——When will this problem of lost accounts come to an end? Who can stand it happening every other day?

——Now, another logistics company has been included in my "blacklist" for shipments. I have to be more careful when shipping in the future.

..."

Faced with these doubts that came like snowflakes in the industry, Lanmart could no longer sit still and quickly issued a "Solemn Statement Regarding False Statements About Our Brand Reputation."

Lan Mart stated that recently, WeChat video accounts, WeChat chat groups, Douyin accounts and other online channels have deliberately spread false statements such as its "thunder" and "water-running" accounts, misleading sellers and seriously infringing its legal rights. Lan Mart statement:

1. The establishment and operation of its UPS and USPS accounts are legal and compliant. They always adhere to strict regulations and high requirements for this management. Currently, its back-end delivery is normal, and there are no violations such as "leakage" accounts.

2. The original publisher of the video has been contacted and has proactively deleted the video containing false statements and apologized.

3. Its dedicated line business unit has been taken over by the group’s chairman himself, who is responsible for overall operational management.

4. In response to the malicious dissemination and false statements that defame its brand reputation that still exist on the Internet, the legal team has taken screenshots to collect evidence.

Finally, it also called on peers to operate in compliance with regulations and compete rationally, and prohibit the use of unfair competition to disrupt the market order. Although it is still unknown whether this incident was caused by Lanmart's competitors, it is an indisputable fact that competition among freight forwarders is becoming increasingly fierce.

Another company accepts goods for "0 yuan", and freight forwarders are trapped in low prices

When a company goes bankrupt or when people talk about how to choose a reliable freight forwarder, "low price" is a topic that is often brought up for discussion. It is said that cheap goods are not good, but as the industry becomes more and more competitive, the phenomenon of receiving goods at low prices has become more and more common.

In the early and middle stages of the epidemic, due to insufficient transportation capacity, sellers asked freight forwarders to ship goods even when freight rates skyrocketed. But now the situation has changed 180 degrees, and freight forwarders have become begging sellers to ship goods, and even repeatedly pushing down the price bottom line in order to attract more sellers.

Earlier this year, a freight forwarder announced that it would deliver goods to nine major FBA warehouses in the West Coast of the United States for free, and even offer rebates. This news shocked the entire cross-border industry, and many people called the freight forwarder "crazy." At the same time, this operation has also brought the competition among freight forwarders to a more intense state.

Just as people in the industry had recovered from the shock, another freight forwarding company in Shenzhen recently announced the news of "receiving goods for free". This time, it provided free delivery to one more warehouse than the previous one, and the words "reject excessive profits", "purely free" and "purely for public welfare" were printed on the promotional posters.

Although some people question whether it is a scam to attract attention, saying that there is no free lunch in the world and that even if the goods can be shipped, there are restrictions, there are still quite a number of sellers eager to try.

It is undeniable that "receiving goods for free" is most likely just a gimmick for these freight forwarders to attract traffic, but the logistics industry is becoming more and more competitive, and it is indeed a reality that we can see that it is still competitive even when it loses money. Since the beginning of this year, the editor has received news that many freight forwarders have changed their careers. Some of them have switched to become sellers, some have switched to other service providers, and some have even left the cross-border industry directly. The reasons for their leaving mostly point to the fact that logistics is becoming more and more difficult, and it is difficult to receive goods without price or channel advantages. And on social media or in communication groups, you can often see freight forwarders sighing helplessly: "It's been a long time since there has been any performance."

Behind the low-price freight forwarders, the freight rates that once soared to the ceiling are also cooling down rapidly. According to data from Freightos, an online freight market, the freight rate for a 40-foot container from China to the west coast of the United States has dropped to US$1,400 in early January this year, a 93% drop from the peak of US$20,600 in September 2021. Recently, it has even been as low as US$850.

Xeneta CEO Patrik Berglund wrote in a recent market update that falling freight rate levels and current market fundamentals suggest a third-quarter rebound is increasingly unlikely, “making it difficult for the industry to reverse current trends due to continued weak demand, ongoing macroeconomic and geopolitical uncertainty, and growing overcapacity.”

The entire chain of cross-border logistics is interconnected. Freight forwarders are having a hard time and shipping companies are directly affected.

The "downward trend" is bottomless, and shipping companies have stopped sailing one after another

Like freight forwarders, shipping companies also have to face a sluggish market, decreasing freight volumes, and a continued decline in freight rates.

Now import volumes are falling at a large number of ports in Europe and the United States. For example, on January 9, 2022, 109 container ships were docked off the coast of California, waiting to be unloaded at the ports of Los Angeles and Long Beach. But at the same time this year, this phenomenon was almost gone.

In addition, according to data from the rate benchmark platform, the rates from Northern Europe to the Eastern US are at their lowest level in more than three years, having fallen by about 80% since January 1 this year alone. At the same time, freight rates on the Asia-Europe route have also fallen by another 41%.

This is not the worst case scenario. FW predicts that US container imports will decline further in the second half of 2023, and a "new" bottom will be reached in imports during this downward cycle.

With no clear end in sight, some shipping companies simply said they “didn’t want to play anymore”.

In mid-June, China United Lines (CUL) issued an announcement, announcing that it would suspend its US West Coast e-commerce express TPC route from the 26th week (June 25) until further notice.

As early as February this year, ZIM announced the suspension of the ZEX route. For cross-border e-commerce sellers, this is a relatively high-quality route in the western United States, and it has become even more famous during the epidemic. Therefore, when the suspension notice was released, many sellers sighed.

In addition to the suspension of shipping companies, UPS also reduced its flights. At the end of April, at the earnings briefing, it said that in order to control costs, it would optimize the configuration of domestic aviation operations and further reduce scheduled flights on international routes.

The reason for its freight network adjustment is also the sluggish market demand. It said that the retail market in the United States and other regions has slowed down, and the Asian export market has been particularly weak. The average daily international transportation volume fell by 6.2% year-on-year, and the Asian transportation volume fell by 8.9%.

Blue Mart