The ship built by a cross-border seller at a cost of 200 million has been successfully launched!

The ship built by a cross-border seller at a cost of 200 million has been successfully launched!

The ship has not been delivered yet, but the freight rate has already hit rock bottom! Will the big seller lose money?

 

Earlier this year, the cross-border listed giant Lejia Holdings said it plans to sign a contract with a first-class domestic shipyard to build a 1,800TEU container ship, with a total construction cost of US$32.6 million (approximately RMB 207 million) and a delivery date of March 31, 2023.

 

Now, the ship has been successfully launched at the Huanghai Shipyard ...

 

The ship built by Dama has not yet been delivered for use, but losses are inevitable?

 

On December 14, Lejia Holdings' 1,800T container ship was successfully launched at the Huanghai Shipyard and is expected to be officially delivered and put into use in the first quarter of 2023.

 

Based on its sailing speed, the ship is positioned as a fast ship.

 

Previously, Lechuang Holdings stated that the company's shipbuilding was mainly motivated by the pursuit of strengthening supply chain security, improving supply chain efficiency, and reducing transportation costs. Shipbuilding can further enhance the user experience of fast delivery of e-commerce shopping, shorten delivery cycles, increase inventory turnover, promote the integrated operation of the company's public overseas warehouse business and first-leg shipping, drive more small and medium-sized enterprise brands to go overseas, reduce the impact of logistics costs on brand operations, and lock in international shipping container transportation costs in low-cost areas. In the future, the cost of ocean shipping a single 40-foot high cabinet container will no longer exceed US$3,000.

 

From the reasons listed by Lege for shipbuilding, there are many benefits, but after the news broke, it still attracted a lot of controversy. One industry insider said that shipbuilding and shipping are two different concepts. Ships are just carriers of transportation, and shipping needs to solve a series of supporting issues at the port of departure and the port of destination. Don't think that you can sit back and relax in the logistics link after building a ship, because there are still a series of problems waiting for you.

 

In response to this view, Leckey also said that it is unlikely that the company will operate the ship alone , but will cooperate with the shipping company. By cooperating with the shipping company, exchanging a self-owned ship for space and locking in transportation costs, it is beneficial to the company's expanding public overseas warehouse business, which is currently an important engine driving the company's overall performance growth.

 

In fact, in response to the seller's decision to build a ship, industry insiders not only believe that "professionals can only do professional things well", but also generally think that shipbuilding is a loss-making business. Many people predict that "it may take 30 years to pay back the cost of building a ship", "by the time the ship is delivered, the epidemic is over, and the freight rate has fallen, the ship will become a pile of scrap metal"...

 

This prediction is not without reason. This year, the first-leg freight rate has dropped significantly due to factors such as insufficient overall demand and lower crude oil prices. Compared with the same period last year, this year's ocean freight has dropped by about 60-80% . According to Taiwan media reports, a large freight forwarding company pointed out that this week, the Vietnam route has returned to the freight rates of 2019 before the epidemic , with large containers (40-foot containers) and small containers (20-foot containers) only charging a symbolic ocean freight of US$1.

 

It is expected that freight rates will have room to decline in the future.

 

"U.S. imports will be sluggish throughout the first half of next year, and Asian exports will drop sharply, especially in February and March, and will not gradually return to normal until the second half of the year." Against the backdrop of extremely weak demand forecasts, several shipping companies are preparing to cancel about half of their scheduled voyages from Asia to Northern Europe and the United States after the Chinese New Year on January 22, 2023. ONE has canceled about 20% of its voyages and will continue to empty them to match demand. Like most shipping companies, ONE expects to operate only about 50% of its services during the Chinese New Year and will resume them when demand picks up.

 

Although the freight rates on the US West Coast route have fallen to about 10% of their peak, the significance of shipbuilding is not very obvious. However, Lege shares said that the shipping market is a highly volatile industry. With the changes in domestic epidemic prevention and control policies, the trade exchanges between the US and China will be closer in the future, and the total import and export trade volume will also rise in the long term.

 

Sellers' sideline business is booming! Lechuang's logistics business layout

 

It is understood that Lechuang started to engage in cross-border e-commerce in 2011 and is one of the earliest companies in China to carry out cross-border e-commerce operations.

 

The company's main products are smart home and healthy office products, including linear-drive smart office lift tables, smart lift workstations, smart lift children's study tables, fitness office chairs, smart electric beds, etc.

 

Public data shows that the "Flexispot" brand lifting tables of LEACHUANG are the top brands in Amazon USA, Amazon Germany and Amazon Japan. The independent website belongs to the first echelon in the United States, the top brand website in Germany and the top brand website in Japan. In China, the "LEACHUANG" brand lifting tables continue to maintain the first market share on Tmall and JD platforms. It is a leading brand in the domestic linear drive industry. 2 out of every 3 smart lifting tables are LEACHUANG brand.

 

In the first three quarters, Lechuang achieved operating income of RMB 2,312,156,262.38, a year-on-year increase of 10.10%; net profit attributable to shareholders of listed companies was RMB 158,331,080.35, a year-on-year increase of 28.12%. In recent years, Lechuang's cross-border e-commerce sales business has grown rapidly, and its logistics business has also developed rapidly.

 

Overseas warehouses are the core infrastructure of cross-border e-commerce. Therefore, while Legao is working hard to sell goods, it is also actively developing public overseas warehouse business to lock in costs in advance, helping the company's cross-border e-commerce business to continue to develop, while serving other cross-border e-commerce companies.

 

It is understood that Leckey has its own IT team of more than 100 software engineers. On the basis of the original OMS and WMS, it continues to deepen the construction of logistics informatization according to business needs. The self-developed TMS system realizes "visual logistics", optimized docking of tail-end distribution, and docking of card delivery business. The BMS system supports automatic financial settlement. At present, the company's overseas warehouses have served more than 400 customer companies in total.

 

In the third quarter, the net profit of Lecangs overseas warehouses has reached 6-7%. Some time ago, Lecangs publicly stated that its wholly-owned subsidiary Lecangs LLC or other subsidiaries designated by the company intends to use its own or self-raised funds to purchase land suitable for the company's business development in the United States for the construction of overseas warehouses. This move aims to enhance the company's "end-to-end" full-process logistics supply chain service capabilities, continue to expand the scale of overseas warehouse operations, and meet its own and more small and medium-sized foreign trade companies' needs for overseas warehousing and logistics.

 

In the next few years, Lechuang will continue to build several large warehouses based on actual conditions to provide online and offline linkage services for small and medium-sized enterprises. From the perspective of subsequent capital investment plans, one of the lands purchased by the company will start construction as early as August or September next year, so some capital investment is expected in August or September next year.

 

Whether it is building its own ships or continuing to increase investment in overseas warehouses, a series of initiatives by Leckey indicate that it is strategically transforming from traditional Chinese manufacturing to Chinese manufacturing + Chinese services, which is also what many big sellers are doing.


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