A large number of Amazon fee adjustments will take effect next week!

Previously, Amazon notified the changes in logistics costs in 2023. Starting from January 17 (next Tuesday), changes in FBA delivery fees, removal and disposal order fees, small and light commodity program fees, and dangerous goods delivery fees will take effect at the same time. Sellers are facing cost increases in many aspects. These variables must be included in the 2023 operating plan.

Right now, the more important task is to prepare goods for the Spring Festival. As the storage capacity has reached the bottom, many sellers have frequently refreshed their storage capacity this week, hoping that Amazon can release some storage capacity to allow them to prepare goods for the Spring Festival. Most freight forwarders in the industry will cut off the goods around the 14th. Can the sellers catch the last ship before the festival?

Next Tuesday, four Amazon fee changes will take effect

This week, Amazon deducted storage fees from last month, which is not a small amount during the peak season. One seller said that more than 100,000 yuan was deducted from the storage fees, resulting in no profit last month; some sellers also said that Amazon directly cleared their account balances when deducting storage fees.

Amazon's investment in logistics and advertising has been increasing year by year, and these costs will eventually be shared by sellers. During this year's peak season, Amazon began to charge peak delivery fees, charging an additional $0.35 per item for FBA products in the United States and Canada . The peak season officially ends on January 14 (tomorrow), and sellers will no longer have to spend this money. But starting next week, more Amazon fee adjustments will take effect, and sellers need to prepare.

Amazon.com previously announced changes to logistics and storage fees for 2023, at least four of which will take effect on January 17 (next Tuesday).

1. FBA delivery fee changes will take effect on January 17, 2023. For categories other than apparel, for all large standard-sized items and oversized items (except special oversized items), Amazon will use the larger of the product weight or volume weight to calculate the shipping weight. For apparel, standard items and oversized items (except special oversized items) over 0.75 pounds will also use the larger of the product weight or volume weight.

The overall FBA delivery fee has increased significantly, with the average outbound fee increasing by $0.22. However, Amazon has made more detailed weight segmentation, breaking down the fee standards to the quarter and half pound levels, giving small and light products a relative advantage. Combined with consumer expectations for 2023, some sellers have decided to focus more on small and light products this year.

2. Changes to the removal and disposal fees for orders will take effect on January 17. According to the new fee standards, the removal and disposal fees for both standard and large items have almost doubled. This is also the most complained about adjustment by sellers.

As the peak season is coming to an end, the clearance demand of sellers in the industry has skyrocketed. Common ways to clear inventory include increasing discounts, bundling sales, participating in outlets, off-site promotion, bulk clearance, etc. After the change takes effect, the removal fee and storage fee will rise together. Sellers need to be more careful about the inventory and clear out redundant inventory in a timely manner.

Amazon launched a feature this week that allows you to add budgets for "discounts" and "buy one, get one free" events. Seller analysis shows that combining it with the bundling feature can speed up inventory clearance.

In addition, the bulk clearance fees remain unchanged . Amazon will charge two fees for each item in bulk clearance: a 15% sales commission and a handling fee charged on a per-item basis.

A seller has more than 200 niche products, but they were not sold at a 30% discount off-site. Now he wants to clear the inventory before the removal fee increases. The price given by the offline service provider is 5% of the selling price, so he intends to try the restocking plan, hoping to recover more value. However, some peers pointed out that the recovery value of the clearance plan accounts for about 5%-10% of the average selling price of the product, and the clearance progress will be slower, and the collection of funds will be slower, so sellers need to make comparisons and trade-offs.

3. Fees for the Small and Light Product Program will change, effective January 17. Amazon will increase the price of eligible products from no more than $10 to no more than $12, and the fee standards have also been refined. Sellers can try to see if they can register at that time.

However, some sellers "take advantage of the situation" by registering for the Small and Light Program at a low price and then raising the price. However, Amazon pointed out that the SKUs did not meet the price threshold requirements of the Small and Light Program. Unqualified SKUs will be removed from the program and charged the standard FBA fulfillment fee. For some sellers, the price of small and light products can be raised again with a limit of $12.

4. Changes to dangerous goods delivery fees will take effect on January 17. Amazon has also detailed the weight classification and charging standards for this fee, but overall the fee has increased. In addition, for dangerous goods that require special handling and storage, Amazon Logistics will charge a separate delivery fee.

In addition to the above 4 fee changes, several other FBA fees will also change after next week. Including:

Storage Fees. Starting February 1, 2023, during the off-peak sales season (January-September), the monthly inventory storage fee for standard-sized items will increase by $0.04 per cubic foot, and for oversized items by $0.03 per cubic foot. During the peak sales season (October-December), the monthly inventory storage fee for oversized items will increase by $0.20 per cubic foot.

Storage utilization surcharge. Starting April 1, Amazon will charge a storage utilization surcharge on monthly storage fees. The surcharge is based on storage utilization, which is the ratio of the seller's average daily inventory volume (in cubic feet) divided by the average daily delivery volume (in cubic feet) over the past 13 weeks. The platform will calculate the storage utilization rate on the last day of a specific month, for example, April's storage utilization rate will be calculated on April 30.

Aged inventory surcharge (long-term storage fee) . Starting April 15, Amazon will increase the surcharge for inventory aged 271-365 days. In addition, Amazon will charge an Aged Inventory Surcharge for all inventory aged 180-270 days, except for items in the clothing, footwear, luggage, jewelry and watches categories. Items stored for more than 365 days will continue to be charged.

New Product Warehouse Discount Program. Starting from March , for all eligible standard-size products, Amazon will provide warehousing, clearance and rebate benefits for up to 100 items per parent ASIN, and up to 120 days of warehousing and rebate benefits for each parent ASIN. In terms of sales rebate, Amazon increased the average rebate from 5% to 10%, which applies to sellers who have completed brand registration for the new product warehouse discount.

In the words of sellers, even small flies are still meat, especially for sellers with a lot of new products. This policy can reduce the risk and cost of new product testing, so naturally they should be caught.

Costs are rising in many areas

In the changes in US logistics costs announced by Amazon in 2023, despite favorable policies, FBA sellers will generally face cost increases in many aspects. This situation is not limited to the US site.

Starting from March 1, 2023, the Japanese site will increase sales commissions, increase FBA fees on April 1, increase shipping fees for the Amazon Logistics Small and Light Program, cancel buyer purchase fees, increase inventory storage fees, increase FBA long-term inventory surcharges, and launch an Amazon Logistics new product incentive program.

In addition to FBA sellers, self-shipping sellers also face certain cost increases.

Starting January 14, sellers will be responsible for all shipping cost changes for returns from self-shipping buyers due to incorrect return labels, which was previously borne by Amazon. Specifically, if the size or weight of the returned product is incorrect, the seller's account will be debited or credited; if the return address is incorrect or invalid, the return cannot be delivered, and the carrier will charge $18 for each package that cannot be returned.

To avoid these expenses, sellers need to ensure that the listed product dimensions, weights and return addresses are correct, but even then, there is no guarantee that buyers will fully cooperate and not make mistakes.

The increase in various fees has put sellers with stagnant profits under great pressure. In conjunction with the increase in FBA delivery fees, industry service providers have recently begun to promote the operation of "reducing Amazon delivery fees", saying that they can directly reduce the price by 0.8 to 3 US dollars per item, without changing the category, size, or price, and the delivery time is valid on the same day, and they promise "legal and compliant with zero risk", which makes some sellers unable to resist. Some sellers analyzed that this may be another form of participating in the Light Small Program, and bypassing Amazon's requirements to reduce shipping costs, there is a high probability that they will be held accountable later.

Sellers also need to adjust their operating strategies or product packaging appropriately based on the new fee standards. However, the most important thing right now is to prepare for the Spring Festival holiday, but the inventory is running out, which has stumped many sellers.

Storage capacity has bottomed out, sellers frequently refresh to catch the last water ship

With the Spring Festival holiday approaching, sellers all hope to finish their year-end work as soon as possible, but because the storage capacity is at a red light and there is no shipping volume available, the stocking work has been delayed again and again.

In the first two days of this week, some sellers updated their backend storage data, and the shipment volume increased slightly. Some sellers took the opportunity to ship goods from the previous few weeks before the New Year, solving the short-term stocking problem. However, many sellers frequently refreshed the backend and still did not see any changes in storage capacity, or even if there was an increase, it was only a few dozen or a hundred, and even after the storage capacity increased, it still could not cover the current deficit, which was quite useless. In this case, the service provider's operation of breaking the shipping limit seems to have started again.

Will Amazon add more storage capacity before the New Year?

One seller remembered that last year, the company released storage capacity four times in two weeks, once on Monday. The company originally planned to take a holiday after shipping the goods on Thursday, but suddenly released a wave of storage capacity on Thursday afternoon. In addition, the warehouse still had inventory, so the company worked overtime to ship another batch of Mason, which just replenished the goods. This year, the seller is also waiting to see whether Amazon will give more restocking opportunities before the holiday. If the storage capacity policy does not change, Amazon will most likely release storage capacity in order to facilitate sellers to prepare goods.

Sellers have always had doubts about the standards for issuing storage capacity. Sales momentum and IPI scores are not decisive factors. In the latest storage capacity adjustment, the Canadian station was particularly sad. One seller said: "Canada has always been very unreasonable. It takes 2 months to ship by sea, plus the delivery period, at least 3 months of goods must be prepared. As a result, there were dozens of orders per day in December, but only more than 1,000 shipments were given."

At present, sellers are looking forward to the update of storage capacity while rushing to acquire storage capacity. Even if there is only a small amount of storage capacity, they should try their best to build shipments to avoid the number of shipments decreasing again after the update. " The last bit of storage capacity before the New Year must be used up quickly. " said a seller.

In the process of building shipments, sellers will also encounter various problems, such as bugs. Some sellers have found that as more shipments are built, the storage capacity does not decrease but increases after a shipment is built. From actual feedback, this situation is not an isolated case. In the eyes of other sellers who are anxious about the storage capacity, this bug is a great benefit, which directly solves the urgent problem.

However, the sellers in question were wondering as they built the system: If the system was corrected, would the shipments that had already been shipped be cancelled? Would the warehouse be able to receive them normally? Sellers had different opinions on this, with some vowing that there would be no problem, while others warned that the shipments would be cancelled and might not be able to enter the warehouse.

In addition to waiting for storage capacity, sellers also need to pay attention to the logistics deadline. Generally speaking, logistics companies will stop accepting goods around the 14th. " The last ship will arrive around the 15th, and our company will stop shipping on the 14th. " A freight forwarder said. If Amazon relaxes storage capacity after this, it will not be of much use to sellers if they miss the last ship.

Another special situation is that recently both Matson's overtime ships and Zim have temporarily stopped sailing.

Last week, Matson released its 2023 Chinese New Year sailing schedule. The CLX route will remain unchanged during the Spring Festival, and will not be suspended; the CLX+ route will be suspended for 3 weeks during the Spring Festival (January 22, 29 and February 5). It is expected that the cargo volume will decrease during the holiday, and the CLX route alone will be able to meet the demand. CLX+ users can book CLX during this period until CLX+ resumes weekly service on February 12.

At the same time, ZEX routes will also be suspended for 3 weeks during the Spring Festival (January 21, 28 and February 4) . Sellers need to make stocking plans in advance to avoid missing out at the last minute.

However, even if the seller knows that the ocean freight cut-off date is approaching, the shipment volume may not be enough for a single ocean freight shipment, and air freight costs are much higher, and low-profit products are at risk of being out of stock.

The consolation is that shipping prices, which skyrocketed during the epidemic, are falling rapidly. Compared with last year, sellers' freight costs have been greatly reduced, and this situation may continue until 2023.

Shipping prices are close to pre-pandemic levels. What will the trend be in 2023?

On January 9, 2022, there were 109 container ships docked off the California coast, waiting in line to unload at the ports of Los Angeles and Long Beach, but a year later that number was almost zero.

The easing of port traffic and the collapse of demand have caused a huge reversal in supply and demand fundamentals, and freight rates have plummeted from the historical highs reached during the pandemic. According to data from Freightos, an online freight market , the cost of transporting a 40-foot container from China to the West Coast of the United States is now $1,400, down 93% from the peak of $20,600 in September 2021, and basically equal to the value before the outbreak of the pandemic in February 2020. Not only that , the costs of other major routes are also falling.

( Changes in costs for shipping a 40-foot container from China )

Some industry insiders believe that some freight rates are already below cost, and prices on some routes are expected to rebound. Drewry said that as of mid-December , the spot freight rate for a 40-foot container between Hong Kong and Los Angeles remained at $1,400, stopping a seven-week decline. This is a significant drop from more than $8,500 a year ago, and is also lower than the average of about $1,500 in the five years before the pandemic. But the reality is that this rebound may be very short-lived.

Before the New Year's Day holiday, domestic sea transport demand rebounded slightly and freight rates rebounded. On January 6, the Shanghai Export Container Freight Index released by the Shanghai Shipping Exchange was 1061.14 points, down 4.2% from the previous period. The "stop falling" trend seems to be short-lived.

Freight rates on most routes fell after the holidays. The supply and demand balance on European routes was not ideal, and the market freight rates fell slightly. On January 6, the market freight rate (sea freight and sea freight surcharge) from Shanghai Port to European base ports was US$1,050/TEU, a slight decrease of 2.6% from the previous period.

On the North American route, the supply and demand fundamentals are weak, and the spot market booking prices have fallen. On January 6, the freight rates (sea freight and sea freight surcharge) from Shanghai Port to the West Coast and East Coast of the United States were US$1,414/FEU and US$2,845/FEU, respectively, down 0.6% and 7.2% from the previous period.

The most volatile part of ocean shipping is plunging, industry experts said, with spot rates, which account for 10% to 40% of ocean container traffic and are seen as a key indicator of the industry’s health, plummeting as a recession looms and a pandemic-induced U.S. import bubble bursts.

The situation is likely to continue. Major carriers such as MSC are also expected to take delivery of hundreds of new container ships, which exacerbates the risk that their existing fleet is already oversupplied with cargo due to shrinking demand for freight.

According to reports from some major U.S. ports in November, business from the East Coast to the West Coast is relatively weak. The Port of Los Angeles' loaded imports fell 24% year-on-year in November, and the total sales volume at that time was 7% lower than last year's historical high; the Port of Long Beach's loaded imports fell 28% year-on-year, and the total transaction volume fell 0.5%; the Port of Savannah's containerized imports fell 7.6% year-on-year in November; the total sales volume has increased by about 6% since the beginning of the year.

Against the backdrop of a pessimistic outlook for the freight industry, shipping companies have begun to reduce voyages or postpone the delivery of new ships. Carriers such as Maersk have stated that they will continue to support freight rates by canceling voyages.

At the same time, shipping companies began negotiating with shipyards to postpone the delivery of new ships. They also stopped ordering new containers and returned as much leased equipment as possible to ease the huge storage costs of empty containers piling up in yards around the world.

However, the problem of container oversupply is difficult to solve in a short period of time. Data from Container xChange, an online shipping container platform, shows that container yards will continue to be overstocked in the first quarter, and as container inventory is further released to the market, pressure on warehouses will increase in the coming months.

At the beginning of this year, the container industry hit a record high, with freight and charter rates peaking at about 5-6 times the level at the beginning of 2020, but as trade volume and congestion eased, the industry experienced a substantial adjustment in the second half of the year. Although current charter rates are still much higher than 2020 levels, freight rates have returned to the level at the beginning of 2020.

The container shipping industry has experienced an unprecedented boom during the pandemic. However , in 2023, low demand and a sharp increase in the fleet will occur simultaneously. For cross-border sellers, the cost of ocean shipping may continue to remain low, or even further reduce compared to 2022, which is also a positive factor.

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