The US dollar exchange rate fell to 6.31, and the seller withdrew $100,000 and suffered a loss of $18,000

The exchange losses faced by cross-border sellers and foreign traders are increasing. Taking the US dollar as an example, compared with six months ago, the exchange loss of sellers withdrawing 100,000 US dollars reached 18,000 RMB, and operating profits were further compressed. In addition, the situation between Russia and Ukraine has brought uncertainty to the European market, and sellers have become more cautious about operating European sites.

Shenzhen is a major cross-border e-commerce center in China. Recently, in addition to suffering losses caused by the fall in exchange rates, many sellers here are also experiencing lockdowns under the epidemic. Many cross-border company personnel are isolated at home or in the company. "More and more colleagues are isolated." "I can't go out to work early in the morning because I'm under control." Similar news has been heard from time to time.

For Shenzhen residents who are always "making money", the work delays caused by the quarantine are more worrying than the quarantine. "It's closed, but the key is that we can't ship goods, what can we do?" a seller said frankly. The epidemic prevention and control has had a certain impact on local logistics, among which special goods shipped from Shenzhen to Hong Kong have been hit the hardest.

As the situation between Russia and Ukraine escalates, the exchange rates of the US dollar and the euro fall

In recent days, the exchange rates of the US dollar, euro and pound sterling have all fallen, becoming the current focus of attention in the cross-border e-commerce and foreign trade industries.

On February 23, the onshore RMB exchange rate against the US dollar broke through 6.32 yuan, reaching a high of 6.3130 yuan. On the morning of February 24, the RMB exchange rate against the US dollar broke through 6.32 and 6.31 successively, and once rose to 6.3095 during the session, approaching 6.3, the highest since April 2018. It fell back in the afternoon and closed at 6.3234 at 16:30.

On February 24, the mid-point of the RMB exchange rate in the interbank foreign exchange market was 6.3280 yuan per U.S. dollar and 7.1514 yuan per euro.

This morning, the onshore RMB exchange rate against the U.S. dollar once again broke through 6.32 yuan. As of 11 a.m., the lowest was 6.3169.

There are many reasons for the decline in foreign exchange rates. Wang Kai, a special researcher at the China Foreign Exchange Investment Research Institute, believes that the rapid appreciation of the RMB in recent days may be driven by the risk aversion caused by the short-term crisis. The geopolitical risks between Russia and Ukraine have increased global risk aversion, and funds have flowed out of some emerging market countries and entered the relatively stable financial markets of China and the United States for risk aversion.

As the RMB appreciates strongly, the US dollar exchange rate falls accordingly. Regarding the sharp fluctuations in the US dollar exchange rate, some sellers helplessly shed their hands: I just lie at home and lose thousands of dollars for nothing. Other sellers' moods also fluctuate with the exchange rate fluctuations:

"Can the exchange rate stop falling? It's about to fall below 6.3..."

"Cross-border e-commerce is already a bit miserable, and the US dollar exchange rate of 6.3 has made it even worse."

“There is no lowest, only lower, from 6.39 to 6.32”

"The exchange rate has hit rock bottom. I'm trembling with fear as to whether I should withdraw tens of thousands of dollars."

Half a year ago, the US dollar exchange rate was still around 6.5, and it is currently hovering around 6.32. For cross-border sellers, the exchange loss of withdrawing $100,000 in just half a year has reached about 18,000 yuan. Even so, considering factors such as turnover needs and uncertainty about exchange rate trends, many sellers will still choose to withdraw cash in the near future. One seller said: "No matter whether it goes up or down, I have already withdrawn it. In this chaotic situation, it is better to put the money in the pocket."

Compared with the fluctuation of the US dollar exchange rate, the euro was directly impacted by the situation between Russia and Ukraine. On February 24, the euro-RMB exchange rate opened at 7.1414, fell to the lowest range of 7.02, and closed at 7.0816. Sellers said that the euro exchange rate had fallen to a bargain price. The pound exchange rate has also fallen below the 8.5 mark and entered 8.4.

Sellers have also become more cautious about operating in the European site. "I don't know if the exchange rate can be stabilized this year. The US dollar has fallen sharply, and the outlook for the euro is still unclear. I am afraid that a small profit will be eaten up by the exchange rate fluctuation. I don't know how the Ukrainian incident will develop this time, so I have to be cautious with the euro and the European site, unless I want to take a gamble." said a seller.

The incident happened in the European market, which made many sellers worried about the sales changes in this target market.

One seller said helplessly that the ruble's plunge and the US sanctions may make it increasingly difficult to do business in Russia. "If you are not doing international trade and cross-border e-commerce, who would care about these international events every day? However, the Russian market accounts for nearly 30% of GMV. Once there are economic sanctions, this market can basically be abandoned.

Compared with cross-border sellers, foreign traders feel the impact of the situation between Russia and Ukraine more deeply.

China is Ukraine's largest trading partner. As the situation between Russia and Ukraine becomes increasingly tense, foreign trade professionals at home and abroad clearly feel the sales slowdown. A foreign businessman resident in Yiwu said that since December last year , the goods sold to Ukraine have been decreasing. Previously, he could sell 100,000 yuan a week, but now he has only sold 100,000 yuan in two months. The tense situation between Russia and Ukraine and the unstable exchange rate have almost stopped the foreign trade business of this merchant this year. Merchants in Yiwu International Trade City also said that the orders from Ukrainian customers have decreased a lot.

"In 2015, when doing foreign trade, we had quite a few Russian customers who were receptive to high prices and quick to pay. But things took a sharp turn for the worse afterwards. The ruble plummeted, the national economy became strained, and consumer purchasing power declined accordingly. With this incident, Europe and the United States have imposed further sanctions, and it's difficult for the (local) economy to get better," said a businessman.

In addition to the resulting changes in order volume, the current exchange rate situation is also a headache for the foreign trade industry.

A foreign trader believes that the RMB will continue to appreciate because it is currently the best safe haven. On the other hand, the USD/RMB exchange rate has been in the red for two days. Although it rose yesterday, it is still not optimistic. His conclusion is, "Anyway, I am quite timid, so I just think that if it rises, I will quickly pocket it."

What impact does the exchange rate have on foreign trade?

Another foreign trade practitioner said frankly that the impact is huge. "I received several orders at this time last year, but when it came to collecting and settling the foreign exchange, it was already terrible, and the 3% net profit was gone. Based on 1 million US dollars, nearly 200,000 yuan of profit went into the pockets of customers. This year I learned my lesson and reported it at an exchange rate of 6.25, hoping that it would not be so ugly again," she said.

As one factory manager said, when a business reaches a certain scale, it is greatly affected by the overall environment. For example, if the price of raw materials rises, the profit will be gone; if the exchange rate changes, the orders will be accepted in vain. Some merchants lamented that in less than a month, the US dollar exchange rate returned to 6.32, but the oil price has risen and there is no downward trend in raw materials. This year is expected to be another difficult year.

Regarding the troubles brought to businesses by the recent exchange rate fluctuations, at the Ministry of Commerce's routine press conference on the 24th, spokesperson Gao Feng said that the Ministry of Commerce will work with relevant departments to take multiple measures to help companies effectively improve their awareness and ability of exchange rate risk hedging by strengthening policy publicity, compiling risk hedging manuals, publishing public courses, and promoting financial institutions to optimize products and services.

Exchange rate fluctuations are related to the bargaining power and cost-effectiveness of foreign trade enterprises. In the next step, the Ministry of Commerce will continue to work with relevant departments to further promote financial institutions to enrich and improve risk hedging business, while optimizing the RMB cross-border trade settlement environment, helping enterprises better adapt to the normal two-way fluctuations of the RMB exchange rate, and continuously improve their risk resistance.

How is the US dollar exchange rate trending?

Tan Yaling, an independent economist at the China Foreign Exchange Investment Research Institute, analyzed that the appreciation of the RMB this year is expected to be limited compared with last year. The current expected level is 6.3-6.5 yuan as the basic trend, and it is possible to appreciate towards 6.6-6.8 yuan. On the contrary, the expectation of an extreme appreciation of 6.2 yuan is almost zero.

In addition, compared with the exchange rate fluctuations caused by the current geopolitical situation, cross-border companies also need to pay close attention to the Federal Reserve's interest rate hike cycle that will begin in mid-March.

In the cross-border e-commerce industry, domestic cross-border e-commerce looks to Guangdong, and Guangdong cross-border e-commerce looks to Shenzhen. A large number of cross-border e-commerce export companies gather here, and many of them are paying close attention to the external situation. "Daily nucleic acid testing, more and more colleagues are quarantined, stocks and ruble exchange rates are plummeting, I hate the epidemic and war." While being troubled by the continued decline in the US dollar exchange rate, many Shenzhen sellers are also facing work and shipping difficulties brought about by the epidemic.

The epidemic was "blocked", the seller said: Fortunately, the account was not blocked

As the number of confirmed cases in Shenzhen continues to increase, some cross-border sellers in Shenzhen have also been affected to a certain extent.

From 14:00 to 24:00 on February 24, Shenzhen reported 5 new cases, of which 3 were close contacts of cases since the "0215" outbreak who were under centralized quarantine observation, and 2 were found in nucleic acid screening in key areas. Lin Hancheng, the second-level inspector of the Shenzhen Municipal Health Commission, said that as of 14:00 on February 24, the city had reported a total of 48 cases.

A few days ago, Shenzhen Mayor Qin Weizhong pointed out in a video conference of the epidemic prevention and control headquarters that there are currently multiple outbreaks in Shenzhen, and the prevention and control situation is severe and complicated. The expression "severe and complicated" is not common in previous relevant meetings, which also gives us a glimpse of the great pressure of epidemic prevention in Shenzhen.

The movement trajectory of confirmed cases in Shenzhen involved Bantian International Center, Gaoshi Stone Logistics Park Mingyinghong International Supply Chain (Shenzhen) Co., Ltd., and Modern International Logistics Park Warehouse 6. There are some cross-border companies and logistics centers here. When the implementation of epidemic prevention policies was controlled, some cross-border practitioners were notified to be isolated in the company.

According to the seller, employees of a suspected cross-border company were quarantined in the company. Without any preparation, some employees slept on the floor, while others slept directly on chairs wrapped in quilts.

A cross-border seller said that when he left, the company was fine, but when he returned, he found that it was closed and he could not go back. Fortunately, he left and escaped the fate of being quarantined. Another seller reported that a group of colleagues had just left yesterday, and another group of colleagues were "locked in" today .

As the epidemic gets closer and closer to them, some cross-border sellers begin to feel anxious. One seller is helpless: "One yesterday, one today, it feels like it's getting closer and closer to me, damn the epidemic!" Under the epidemic, Shenzhen cross-border sellers are particularly sensitive to the word "lockdown":

A: I was blocked.

B: What’s the reason? Is there any prompt in the background of the account?

A: You are sick.

B: Is it fake orders or infringement?

A: I said I was blocked. I was blocked at home in the community. Not my account.

The cross-border practitioner responded seriously: “ For people who work for Amazon, the first reaction when they see the blockade may be that the account has really been blocked. It’s okay if the person is blocked, as long as the account is not blocked. ” Industry insiders said that, in fact, we should have adapted to the epidemic, the blockade is the blockade, and what everyone is anxious about is not the blockade, but the lack of income.

At present, many places in Shenzhen have started large-scale nucleic acid testing. Many places require four tests every four days. People entering and leaving residential areas, supermarkets and other public places must hold the test records of the day. Many people are also locked in their homes or companies. If cross-border sellers are blocked, they will face the situation of being unable to ship. One seller said bluntly: It’s blocked, the key is that I can’t ship. What can I do?

Freight forwarder G said that one of their customers was blocked and they wanted to ship goods last Saturday, but they were unable to do so and could only ship the goods via US ocean freight this week.

Freight forwarder D said that the current logistics delivery control is still very strict. Goods cannot be shipped if the local area is sealed. For goods delivered to the Shenzhen warehouse from other places, we must confirm whether their warehouse is sealed and whether they can ship normally before delivery. If the goods can be shipped normally, the delivery driver must have 48 hours of nucleic acid test.

If you deliver goods in violation of epidemic prevention policies, you will get into trouble. Recently, a certain International Supply Chain (Shenzhen) Co., Ltd. violated the epidemic prevention and control management regulations to carry out overseas e-commerce cargo transshipment business and cross-border cargo transportation operations. At present, the public security organs have filed a case against the company and the relevant responsible persons Wang and Lu for suspected crimes of obstructing the prevention and control of infectious diseases, and will deal with them according to law.

In addition, a Hong Kong cross-border container truck driver named Huang also violated the epidemic prevention and control regulations. He illegally entered the country to work despite a positive nucleic acid test result, and made an off-site connection with a mainland driver named Zheng, and did not stay in the service station as required. At present, the two drivers have been isolated in accordance with epidemic prevention regulations, and the relevant areas they visited have been designated as closed-off, controlled and preventive areas.

With the recurrence of the epidemic, cross-border e-commerce logistics has undoubtedly become a high-risk industry. According to the Shenzhen Health Commission, on February 24, 23 cross-border truck drivers were detected at the Shenzhen Port for nucleic acid testing. The 23 patients were the 148th to 170th positive cross-border driver cases detected at the Shenzhen Port since February 4.

Sellers cannot ship 300,000 orders, the market is out of stock, and logistics prices are falling

The increasing number of confirmed cases among cross-border drivers will definitely have a great impact on cross-border sellers shipping to Hong Kong.

According to Li Qing from Baidu International Logistics Company, many of the goods of cross-border sellers are transferred from Shenzhen to Hong Kong, and then sent overseas from Hong Kong. The current epidemic situation in Shenzhen and Hong Kong has had a significant impact on the shipments of cross-border sellers, especially those special goods such as electrical goods and liquids that need to be shipped from Hong Kong.

In terms of transportation capacity, Hong Kong has always undertaken a relatively large proportion of the transportation capacity in the Pearl River Delta region, or in other words , in cross-border logistics. If some goods cannot be shipped in Hong Kong, then the entire market basically cannot ship goods. For example, some special goods will have many requirements for shipping to other regions, such as various types of transportation identification reports. Basically, products with electricity or magnetism are flown from South Korea or Hong Kong. Now there are many cross-border drivers in Hong Kong who are infected, and many companies have stopped operating.

Some logistics companies can only switch to other channels. From Shenzhen to Hong Kong, if it is transported by truck, it only takes a few hours to arrive at Hong Kong. Now that cross-border drivers are infected, the current situation is that more than 90% of the goods previously transported by trucks have been changed to sea transportation. For sea transportation, the goods need to be unloaded and picked up after arriving at the port. Compared with truck delivery to Hong Kong, there will be a delay of about 3 to 5 days.

The epidemic will definitely have a certain impact on the shipment of sellers in Shenzhen, but although there are delays, many logistics companies are currently working normally and can basically ship goods normally, which can meet the shipment needs of sellers. Fortunately, logistics prices have recently been reduced, and sellers can save money on shipments compared to before the New Year.

Freight forwarder D introduced that the current freight rates in the market are all lowered. There are not many goods in the market now, and there is no stock in the market. It is useless to raise the price of your cabinets.

Freight forwarder G couldn't help but sigh: " This year is too difficult. My freight forwarding friends all said that there is not much cargo. There was a lot of cargo before the New Year, but now there is very little cargo. There is not enough cargo for the time-limited delivery of Matson, so we have to ship overtime, and there is not enough cargo for the overtime delivery to load the ordinary ship. "

According to feedback from several freight forwarders, the current price per kilogram for ordinary ships shipped to the West Coast of the United States is about 10 and 11, and there may be a trend of falling into single digits. The price per kilogram to the East Coast of the United States is basically 12 and 13. The regular ships to Matsushima are about 14, and the regular ships to the East Coast of the United States are 16.

Li Qing said that changes in freight rates are mainly related to the market. For the logistics industry, the period after the Lantern Festival every year is the slowest time of the year, so freight rates are falling.

There is not much goods on the market at this time, and the source is in the factories. First of all, many factories will not resume work until after the Lantern Festival, and they cannot produce and ship goods in time after resuming work. Naturally, cross-border sellers cannot get the goods, and logistics companies also have no goods. Regardless of which channel is used for shipment, if there is no goods in the market, some logistics companies may lower the freight rate to receive the goods. For example, you offer 30 today , I offer 28 tomorrow, and you offer 27 the day after tomorrow. Everyone will go to each other to receive the goods at a low price, and try to collect the goods that are available in the market.

Secondly, if I do international express delivery, I need to pay enough quantity to a courier company every week. If I don’t move the cabinet that week, I will incur the cost of loss and empty warehouse.

Finally, the policies in some inland cities are getting better and better, and local labor is unwilling to go out to work. Now some factories are having difficulty recruiting workers. Especially under the epidemic in Shenzhen, many people are unwilling to "take the risk" to go to Shenzhen to work, and some factories cannot keep up with the production capacity.

At present, both Amazon sellers and independent website sellers may face the problem of out-of-stock. Li Qing knows an independent website seller who has accumulated 300,000 orders but has not yet sent them out. Because there is no stock, all the inventory in the warehouse has been consumed. He is waiting for the factory's production capacity to recover. Now he packs up as much as the factory can deliver.

In previous years, February is basically the off-season for the logistics market. The production capacity of some factories will gradually recover in early March. After the factories resume production capacity, cross-border logistics freight rates will slowly rise in mid-March. Now, sellers with goods can seize this opportunity to ship goods to hedge against the profit loss caused by the decline in exchange rates.

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Russia-Ukraine situation

Shenzhen Epidemic