0 yuan for receiving goods and rebate! Is the freight forwarder crazy?

At the beginning of 2023, the freight forwarding industry started its first wave of internal circulation: the first-leg freight was directly 0 yuan/KG. At that time, some sellers called it a god, while others said it was a ghost. Now, there are freight forwarders shouting in the circle of friends: The nine major FBA warehouses in the West Coast of the United States will deliver it for 0 yuan throughout the journey, without charging any money and even giving rebates. Do you dare to believe it?

As soon as the news came out, sellers and logistics colleagues were shocked. People in the industry also have different interpretations of such a quotation. Is there any trick to such an involuted price or is it a deliberate gimmick? What kind of sellers dare to take it? Where is the profit point of this company?

The low-price competition among freight forwarders also indirectly reflects the changes in the logistics industry. The identities of sellers and freight forwarders have changed from "sellers seeking freight forwarders" to "freight forwarders seeking sellers" today.

In order to receive more goods, freight forwarders have come up with various tricks: sending milk tea to customers every day, making dozens of greeting calls a day, carrying tea to ask for goods ... But even so, many freight forwarders still admit that they cannot receive the goods. Due to the influence of the overall environment, many logistics companies are laying off employees and adjusting performance-based salaries. Most freight forwarders cannot get commissions, and the salaries of some freight forwarders have also been reduced in disguise.

Unlike freight forwarders, many shipping companies are still in a period of bonus. Yang Ming Marine Transport issued a mid-year bonus of up to 27 months' salary, which is much higher than Evergreen Marine, taking the lead. In addition, due to factors such as cabin reduction, some markets such as Europe have experienced overcapacity. Many shipping companies are planning to increase prices, and sellers need to continue to pay attention to the future situation.

The freight forwarding industry is experiencing the ultimate internal competition with 0 yuan return rebate throughout the whole process

Freight forwarder A: The whole journey to the US is 3.3 yuan/KG;

Freight forwarder B: It’s 2 yuan/KG for the whole journey;

Freight Forwarder C: I don’t want any money;

Freight Forwarder D: No money required, but rebates. Are you going?

Do you think your quotation is already very competitive? Far from it. In the current freight forwarding market, there is no most competitive quotation, only more competitive prices. At the beginning of 2023, a freight forwarder successfully won the title of the most competitive quotation with a freight rate of 0 yuan/KG, and now its rival has appeared.

Recently, in the circle of friends, the editor saw that a logistics company in Shenzhen established in March 2022 launched a one-year anniversary event. For nine major warehouses in the United States, including ONT8/LAX9/LGB8/SCK4/SMF3/LAS1, the company provides direct delivery at 0 yuan throughout the entire process.

For new customers, the company also made a time commitment: for goods that have not been signed for after the promised time limit, the company will compensate at 0.5 yuan/kg natural day, and different warehouses need to provide POD within the required natural day after the ship is sailed. At the same time, for goods with a delivery weight ratio of more than 1:200, the company will give customers an additional 0.2/kg.

Many sellers and peers were shocked by such an outrageous offer. "Isn't this a clear attempt to grab the market?" A peer said that the company did deliver the goods for free as advertised. In the week after the advertisement was issued, the company received 800 cubic meters of goods, but it was not ruled out that there were additional agreements signed.

More sellers are worried that there must be something wrong with the unusual situation . They speculate that such an inward-looking quotation must have some secret or be an advertising gimmick.

According to some industry insiders, there is no profit at all in buying general goods at such a low price, unless he uses general goods as a cover and has sensitive goods in the cabinet that really make money, which is his profit point. If it is not found, then everything will be fine, but if it is found, then the whole pot will be destroyed. Some sellers have suffered greatly from it, saying that as long as you dare to sell general goods with sensitive goods, there are people who will pay you for the general goods.

Of course, some sellers hold a different view. They believe that these companies are nothing more than a gimmick. As long as you book a space, the cost will go up. Another situation is that the goods are received for 0 yuan, but the arrival time of the goods is uncertain. Even if they arrive, they may be piled up at the dock and the sellers may pay money to redeem the goods, commonly known as "demanding money when arriving at the port". Even worse, the goods are taken away directly.

There will always be some sellers who like to get cheap goods, or even get nothing. Regarding this kind of internal freight, industry insiders said that this operation undermines the market rules. At the same time, they also gave their opinions: "If your goods are of low value and the tax rate is not high, you can try it." However, this choice has a lot of gambling elements. As the saying goes, you get what you pay for. For products that are far below the market price, sellers need to bear great risks.

The 0 yuan/kg price at the beginning of this year is a good example. At that time, the freight forwarder set off a storm in the entire cross-border logistics circle with its internal price of 0 yuan/kg for the first leg. At that time, many sellers questioned it and made various speculations. In the end, the reality was indeed the case. This freight forwarder was burdened with many lawsuits, which seemed to verify what the sellers said about "the trick behind 0 yuan/kg."

It is undeniable that the phenomenon of freight forwarding involution is inseparable from the industry. In 2021, cross-border e-commerce is in rapid development, and the logistics industry is also highly prosperous, and the container market is even more difficult to find. However, since 2022, affected by various factors, logistics prices have fallen rapidly, and freight rates are less than 25% of the same period in 2021.

Data from the Shanghai Shipping Exchange on March 10 showed that the Shanghai Export Containerized Freight Index (SCFI) fell 24.53 points to 906.55 points last week, a weekly decline of 2.63%. Previously, the freight rate per FEU from the Far East to the West Coast of the United States fell by US$37 to US$1,163, a drop of 3.08%. At the same time, the US East Coast route also began to fall, with the freight rate per FEU from the Far East to the East Coast of the United States falling by US$127 to US$2,194.

At Ningbo Beilun Port, there are also many trailers parked. Previously, they were mainly used to transport containers. Now that sellers have less shipments, they have no work to do and can only park their trailers to enjoy the sea breeze. Some freight forwarders also said that the logistics prices show how bleak the market is. The QA special line direct delivery is about 3 yuan, which is a price that has never been seen before.

"The shipping price has long returned to the level before the epidemic, but there is no cargo to ship. The freight forwarder calls me every day to ask if I have any cargo to ship. In the past, I had to beg them, but now it's the other way around," said a seller. As cross-border sellers' orders decrease and logistics demand falls, freight forwarders are also having a hard time, and their relationship with sellers has also changed.

After being deducted from their salaries, freight forwarders are struggling to make ends meet with low salaries

"Why is it so hard to work as an international freight forwarder now? They chase me every day, asking me to ship goods to them and even visit me," said a seller. In fact, this phenomenon is not an isolated case. With the general shortage of goods in the market, freight forwarders have begun to fight inward in order to receive goods. In order to achieve their sales targets, they are chasing sellers to receive goods.

Open Weibo and other social platforms, search for words such as cross-border logistics and Amazon, and the first page is basically full of freight forwarders selling products. Even the comment sections of many industry big names have been flooded, so much so that one seller jokingly said that "there are more bowls than rice in the pot." A freight forwarder admitted that conventional methods such as door-to-door sales and sending quotations to customers are no longer applicable at this stage, and there is no prospective customer asking for prices.

"Is the market really so bad? Isn't it better to have a 7.5 yuan/kg ship delivered to the warehouse 13 days later?" a freight forwarder said. The phone call was hung up, the email was not replied, and the reply was take me off your list. The only thing missing was the angry words of all capital letters + exclamation marks. In order to receive the goods, many freight forwarders have used new tricks, such as sending milk tea, carrying tea to ask for goods, and visiting the seller, but they have also been complained by many sellers↓

I have already drunk two cups of milk tea sent by the freight forwarder. It seems that the freight forwarder is "working really hard".

I receive more than a dozen calls a day. Those who know the situation think they are looking for goods, while those who don’t think they are debt collectors.

I received a few more boxes of tea, but I have nothing to sell.

There's no point visiting me. My boss says I'll sell it to whoever is cheaper. If it's more expensive, he'll deduct my salary.

…

There are countless cases like this. Even so, many freight forwarders are still unable to receive the goods. At present, the logistics companies that can normally receive goods are large-scale companies with a certain reputation in the industry and some stable partners. However, relatively speaking, there are not many companies with an increase in the volume of goods received. The volume of goods received by most companies is in a state of decline, and some are even less than one-third of previous years.

Compared with large logistics companies, the current situation of small and medium-sized logistics companies is even more pessimistic. Some small logistics companies with weak competitiveness and low risk resistance are either acquired by peers or eliminated. An industry insider revealed on social platforms that many small and medium-sized freight forwarding companies in Shenzhen have closed down, and it is expected that half of them may be eliminated.

From the peak of the epidemic to now, the freight forwarding industry is gradually returning to normal. Currently, the remaining small and medium-sized enterprises are busy saving their lives. They lower prices to squeeze profits and engage in internal competition. This is what we mentioned at the beginning. In order to gain more market share, many logistics companies have begun to join price wars and promotional means. Freight forwarders who accept goods at low prices are not uncommon.

However, involution has a more serious cost-consuming effect on the enterprises themselves. The vicious competition and chaos among peers in the industry have led to the loss of profits. They can only place more hope on layoffs and salary cuts to survive this period of no orders. A peer in the industry admitted that the company has laid off one-third of the old salesmen and recruited a lot of newcomers, mainly because the salary is low and easy to manipulate.

Logistics companies that did not lay off employees advocated for comprehensive salary cuts. "Originally, we couldn't get much commission if we couldn't receive any goods, and our salary was already low enough, but now the company has started to cut salaries, and many subsidies such as transportation fees and phone bills have been cancelled," a freight forwarder complained. Coincidentally, a freight forwarder in Ningbo also said that the company adjusted the bonus structure, and the comprehensive salary was reduced by 3,000 to 4,000 yuan compared to before, which was very painful.

A survey data shows that the salary gap in the freight forwarding industry is quite serious.

The total salary is 4,500, and I have been working there for more than a year.

After tax, I earned over 7,000 yuan and worked for 6 years.

When it was good , it was over 20,000, and now it’s at a low of over 10,000.

Just got a salary of 5K+.

Overall, due to the size and geographical location of freight forwarding companies, the wages of freight forwarders will also vary. The lowest monthly salary is around 5K, and the highest is over 10,000. According to a data from Zhiyouji, in 2023, the largest number of people in the freight forwarding industry will receive a salary of 6K-8K, accounting for as high as 32%. On a recruitment website, the salaries offered by freight forwarding companies are mainly in the range of 2.5K-12K, and the gap is quite obvious.

But for freight forwarders, whether they are high-paid or low-paid, they have to go out early and come back late, and be on call at all times. "It's really tiring. I have to deal with customers' urging and bosses' nagging every day, and be on call 24 hours a day. I don't have any time for myself at all," said a seller. If the salary is high, I have motivation, but if the salary is low, I just want to lie down and do nothing.

In the eyes of some freight forwarders, the logistics industry has lost its former glory. Most of them are just getting by on a basic salary, and the hard work they put in is not proportional to the rewards. When a fresh graduate consulted about freight forwarding, many freight forwarders hurriedly advised: "Don't be a freight forwarder, don't be a freight forwarder, don't be a freight forwarder, you will die young", "Don't be a freight forwarder, you will have to work overtime and you will have no time for yourself."

At the same time, freight forwarders are also worried about a situation. As ChatGPT becomes popular, shipping companies also begin to introduce it. Will it reduce or even replace the value created by freight forwarders? COSCO Shipping Technology said that the company has begun to explore the integration of ChatGPT-related technologies with the company's existing technologies.

On the question of "what kind of help can you bring to shipping companies", ChatGPT said it can provide shipping companies with a variety of help, including customer service, automated processes, data analysis, market influence, and language translation. In general, it can help shipping companies improve efficiency, reduce costs, increase customer satisfaction, and enhance market competitiveness.

In terms of customer service, liner companies in the past would not provide customer service directly to direct shippers, but usually freight forwarders. But now things have changed, and many liner companies have opened direct booking platforms, where sellers can query this information based on container numbers and bill of lading numbers, but the current functions are not comprehensive enough. In the future, ChatGPT can be used to answer questions from customers about business development, cargo transportation status, ship arrivals, etc., to achieve multilingual, all-weather, and fast-response customer service.

But in comparison, this is only one of the functions of a freight forwarder. ChatGPT can only affect the communication value of a freight forwarder, and there is no need to worry about the freight forwarder itself facing a crisis. In addition, freight forwarders are currently expanding their capabilities in supply chain management, cross-border logistics and other aspects. For example, customs declaration, trailers, warehousing, multimodal transport and other services will not be replaced by ChatGPT.

Compared with the above-mentioned freight forwarding industry which is struggling to survive and facing salary cuts, the lives of shipping company employees are particularly comfortable and their benefits are even more enviable.

Yang Ming Marine’s annual prize money is RMB 300,000 per person. Can it continue in 2023?

Yang Ming Marine Transport recently released its 2022 financial report, with full-year revenue of NT$375.9 billion (approximately RMB 85.052 billion), an increase of 12.6% over last year; net profit was NT$180.6 billion (approximately RMB 40.863 billion), an increase of 9.2% over last year, both setting historical highs.

The announcement mentioned that Yang Ming Marine Transport will hold a shareholders' meeting on May 26, at which time it will allocate about 2.329 billion yuan to employees for mid-year bonuses. If calculated based on 1,739 employees, each Yang Ming Marine Transport employee will receive 1.34 million New Taiwan dollars (about 300,000 yuan); based on a monthly salary of 50,000 New Taiwan dollars, each employee's mid-year bonus is equivalent to 26 to 27 months of salary. This mid-year bonus, plus last year's year-end bonus ( 12 months plus 1 month of assessment bonus), is equivalent to each employee receiving 40 months of bonuses a year.

Another shipping company we are familiar with, Evergreen Marine, also released its financial report for 2022. Its full-year revenue was approximately RMB 141.389 billion, and its net profit after tax was approximately RMB 75.329 billion. Both revenue and net profit set new highs, but in comparison, Evergreen Marine's benefits are not as great as Yang Ming Marine's.

Evergreen Marine will pay a total bonus of 1.918 billion yuan to its employees. Based on the company's 3,100 employees and an average monthly salary of 60,000 yuan, each employee can receive a mid-year bonus for 10 to 11 months, which is about 140,000 yuan. Adding last year's 50-month year-end bonus, the total bonus each employee can receive in 2022 is about 60 months.

Compared with the current situation of freight forwarders, many people in the industry are envious of shipping companies for being able to offer such high rewards, but we still don’t know whether these shipping companies can continue their outstanding performance and rewards in 2023.

As we all know, the performance of shipping companies is mainly due to the strong demand in the container shipping market and high freight rates. However, in 2023, sellers generally reported that the economy was in recession and the order volume was not optimistic, so shipments also decreased. Coupled with the decline in ocean freight rates, the performance of shipping companies in 2023 can be said to be very uncertain.

However, Evergreen Shipping has high confidence in the market and believes that the market in the second quarter of 2023 will be better than the first quarter. At the same time, it is expected that the market will pick up starting in June this year, and the shipping market will show a significant improvement in the second half of the year.

Industry insiders pointed out that as shipping companies adjusted their capacity, factory shipments began to increase, and container ships on European routes were already full. Many shipping companies are planning to raise prices, which are expected to increase by US$200 per container starting in April, but whether this will be successful remains an unknown.

At the same time, some China-US routes have also started to get busy. "The number of our containers in March has doubled compared to the same period in February." A freight forwarder who focuses on China-US routes said that they have gradually returned to a busy working state. Against the background of a decrease in total volume and a downward trend in prices, the workload in March is significantly higher than that in February. According to freight forwarders, some markets to the Gulf of Mexico in the United States, including Mobile and Houston, have experienced overbooking.

But relatively speaking, the situation of some routes between China and the United States is not so optimistic, especially under the pressure of inflation, the freight rates of the US East Coast route have fallen relatively sharply. However, many industry insiders believe that the current decline in freight rates is large, and most of them have fallen to around the cost price, and they should not fall much further.

Due to factors such as ship schedule adjustment, Southeast Asian routes have also seen overbooking, especially routes to Indonesia and other regions. From the end of February to March, overbooking was serious, and shipping prices also rose slightly. However, some industry insiders pointed out that the surge in cargo volume on these routes may be closely related to local festivals such as Ramadan.

In general, the shipping market has picked up, and coupled with the recovery of economies in various countries, the possibility of an increase in logistics costs cannot be ruled out in the future, and sellers need to continue to pay attention.

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