A seller in Shenzhen reported that an employee was investigated for receiving huge kickbacks

In the past six months, shipping prices have continued to decline, alleviating the freight pressure on cross-border sellers.

Not long ago, a Shenzhen company reported internally that an employee was investigated for falsely reporting overseas logistics prices and accepting kickbacks. A logistics insider revealed that it is not uncommon for the logistics manager of a cross-border e-commerce company to take a share of the profits. In today's market where shipments have dropped sharply, the shipper has a greater say, and the share of the staff has also risen.

At present, transportation demand in Europe and the United States is still relatively low, and market freight rates may continue to fall. Shipping companies have begun to cancel routes and reduce sea and air transport capacity.

Shenzhen cross-border company employees investigated

In September, a cross-border e-commerce company in Shenzhen issued a notice saying that it had received an external real-name report and investigation results. It was found that a logistics specialist in the company's commodity management department had used his position to falsely report overseas logistics prices since he joined the company, and had long charged logistics companies rebates on the difference in logistics fees. The rebates were huge in amount, causing the company to suffer serious economic losses.

The commissioner confessed to illegal acts such as falsely reporting logistics prices and accepting kickbacks, which seriously constituted the crime of commercial bribery. The case is still under investigation and the company also reserves the right to pursue his legal responsibility.

The company was founded in Shenzhen in 2012 and focuses on the field of 3C digital accessories. Its products cover categories such as laptop accessories, mobile phone accessories, digital accessories, and beauty tools. It has a presence on cross-border platforms such as Amazon, AliExpress, Shopee, Lazada, and in the domestic market. Its products are exported to more than 100 countries in Europe and the United States.

The recruitment information shows that it has currently obtained more than 70 national certified patents (invention patents, utility models and appearance patents), has more than 200 registered trademarks and independent intellectual property rights, and is a high-tech enterprise with great potential.

After discovering the incident, the company said it would conduct a comprehensive self-inspection of violations such as accepting gifts and kickbacks in violation of regulations. Those who actively report violations will be dealt with at the discretion of the company. If any violations are discovered after investigation, the employees involved will be dismissed and handed over to judicial authorities for handling . At the same time, businesses that bribe in violation of relevant national laws will also be handed over to judicial authorities for handling.

Last year, sellers overstocked their products, and sales declined after entering 2022. In addition, due to the pessimistic sales environment, this year's cross-border e-commerce export inventory has generally declined, and shipping costs in Europe and the United States have continued to decline, allowing cross-border companies to breathe. However, employees falsely reported logistics prices to benefit from it, which can be said to be "sucking blood" from the company in question in the current difficult market .

However, it is not uncommon for logistics liaisons to receive kickbacks, and as market shipments decrease, the share of the profits becomes larger and larger.

An industry insider revealed that a freight forwarder gives a share of the profit to the seller's logistics manager, and 1.8 yuan of the 3 yuan profit per kilogram in the monthly account period is given to the latter. Recently, a freight forwarder in Hunan said that a customer who previously brought him 50,000 yuan in commissions every month now wants to increase his share of the 3 yuan profit to 2.1 yuan, which accounts for 70% of the profit.

Freight rates are still falling. The FBX index released by the Baltic Shipping Exchange shows that as of September 26, the average FBX container shipping price was US$4,029, down 63.8% from the historical high in September last year. Among them, the freight rate of the China/Far East - North America West Coast route fell 85.7% from the highest freight rate level last year, and the original price of the China/Far East - North Europe route fell 53.2% from the highest point in January this year.

In addition, during the epidemic, shipping companies' profits soared and demand doubled, so they expanded production. As new ships were put into use one after another, the shipping capacity became even more surplus. In the upcoming Q4, the low freight rate situation in the market may continue.

Freight rates in Europe and the United States continue to fall, and shipping companies reduce capacity

On September 30, the Shanghai Export Container Comprehensive Freight Index released by the Shanghai Shipping Exchange was 1922.95 points, down 7.2% from the previous period.

In order to prepare for the peak season, there is often a peak in shipments before the National Day holiday. However, recent economic data shows that the economic recession has begun to spread in Europe , and there has been no peak in shipments in the European shipping market, and the market is weak. On September 30, the freight rate (sea freight and sea freight surcharge) from Shanghai Port to the European basic port market was US$2,950/TEU, down 6.7% from the previous period.

The situation on North American routes is not optimistic either. The transportation demand before the holiday has not improved, the supply and demand relationship is slightly weak, and the market freight rates continue to fall. On September 30, the market freight rates for Shanghai Port to the West Coast and East Coast of the United States were US$2,399/FEU and US$6,159/FEU, respectively, down 10.6% and 5.8% from the previous period.

Due to the decrease in freight demand, some shipping companies have begun to cut routes. According to Sohang.com, after Matsun canceled the China -California Express (CCX), 2M Alliance members Maersk and MSC also announced the suspension of their TP3 and Sequoia services from China to the West Coast of the United States last week, due to the sharp drop in freight demand from Asia to the West Coast of the United States in the past few weeks.

In addition, Maersk will suspend the TP28 and TP20 services on the Asia to US East Coast route and merge them into the new TP20 service.

It's not just ocean freight that's adjusting. In the first two weeks of September, global air freight prices continued to fall, and some airlines began to consider cutting capacity. FedEx has announced a reduction in its air network, with the number of flights on trans-Pacific, trans-Atlantic and Asia-Europe routes to be reduced from October until November.

Regarding the future trend of sea and air freight rates, relevant personnel from China National Foreign Trade Transportation Corporation stated that the future trend of sea freight rates depends on many factors, including the impact of epidemic prevention and control on shipping capacity, changes in market supply and demand, etc. It is expected that international sea freight rates will fluctuate slightly above the current level, but it is unlikely to return to the 2019 level in a short period of time.

The trend of international air freight rates mainly depends on the resumption of commercial flights . After commercial flights are fully restored in the future, it is expected that freight rates may have some room to fall from the current level.

Judging from the market situation, freight volume will only increase when the economic situation in Europe and the United States improves and shopping demand increases, thereby stimulating a rebound in freight rates, but this condition is not yet met.

Due to the energy crisis, heating products are highly sought after in Europe, but sales of many other products have declined to varying degrees. On October 1, Italian energy giant Eni said that Gazprom has suspended the supply of natural gas to Eni, citing the inability to transit through Austria. With Russia suspending the supply of natural gas to Italy , Europe's energy crisis continues to worsen, and the economic situation is not optimistic.

In the US market, economic growth momentum is slowing down. Hurricane Ian landed last week, causing millions of people in Florida and other places to lose their Internet access, move, or even die. Cross-border sellers' orders were also slightly affected. However, in October, some sellers reported that orders have rebounded. It is hoped that this trend will continue and become the beginning of the peak season.