Stop work, layoffs! The foreign trade boss suffered a huge loss after renting a 4,000-square-meter factory to expand production...

Benefiting from the epidemic, China's foreign trade companies have ushered in a huge surge in orders, and overseas orders have poured in. Some foreign trade companies have begun to expand their factories and equipment on a large scale, renting more than 4,000 square meters of factory buildings, but reality has played a huge joke on these foreign trade people.

A series of factors, such as a sharp drop in orders, changes in shipping costs, skyrocketing raw materials prices, and blocked shipping routes, have led to warehouses being overstocked and operating costs rising. Foreign trade companies have had to start laying off employees. Some even have warehouses with goods over tens of millions in stock. The dreams of foreign trade people to get rich quickly have been shattered in an instant.

The factory was overwhelmed with orders, and the foreign trade people rented a 4,000-square-meter factory to expand production but suffered heavy losses

Recently, a "foreign trade person" said that he was almost driven crazy by the foreign trade business.

According to the foreign trade person, from the end of last year to the beginning of this year, foreign trade orders came in one after another, and his original factory and equipment could not keep up with the growth rate of orders. In order to meet the needs of order production, at the beginning of this year, the foreign trade person rented a factory of more than 4,000 square meters and purchased a lot of new equipment.

In the middle of this year, with orders still full and goods in short supply, foreign trade people had no choice but to outsource some orders. More and more orders, increasingly prosperous business, but all this completely changed after the freight rate increased.

The shipping costs are getting higher day by day. Even though the goods cannot be shipped, the factory is still going ahead with production, resulting in a large amount of inventory piling up in the factory and more and more funds being occupied .

In the eyes of this foreign trader, orders will at least return to normal after the ocean freight rate drops, but now that customers have stopped placing orders, one can imagine what will happen next. Although freight rates have a downward trend, raw materials have continued to rise, and the situation is still facing a significant reduction in orders.

The foreign trader said that since the warehouse was full, he could not continue production and had to lay off employees. After working hard for half a year, not only did he get nothing in the end, but the operating costs were also increasing. He thought that the foreign trader's life was like a duck in water, but now it seems completely different. He was almost driven crazy by the foreign trade business.

In the entire foreign trade industry, there are more than one foreign trader who has encountered such a situation. An industry employee revealed that his boss fell into the vortex of bankruptcy due to expanding production capacity. Due to limited funds, the factory went bankrupt as soon as the funds for orders from major customers were delayed. This case is enough to show that the capital chain plays a vital role for foreign trade people, and the risk of bankruptcy is almost entirely paid for by funds.

When faced with the temptation of skyrocketing orders, most foreign trade people took advantage of the situation and chose to expand production, quietly hoping to get rich overnight with the order income. However, benefits and risks often coexist, and blind production is likely to become the last straw that breaks the camel's back for foreign trade people.

Some sellers revealed that because of the backlog of sea freight orders, foreign countries will place repeated orders if they cannot get the goods, which will eventually lead to a large number of foreign customers breaking the contract, and the foreign trade people can only get a small amount of liquidated damages. But more importantly, a lot of goods are backlogged in the warehouse, making it impossible to continue operating. This is one of the reasons why some foreign trade factories have problems in their operations.

Freight rates rise, factories are overwhelmed with goods

In the eyes of many "onlookers", the development of the foreign trade industry in recent years is absolutely very gratifying. However, as "authorities", they have different views... Some practitioners said that in fact, the profits of foreign trade enterprises are really not very high, and this industry is far from being as "attractive" as it seems.

" Ship owners are eating meat, freight forwarders are gnawing on bones, but foreign trade people can't even drink soup ... " A foreign trade salesperson said that since logistics prices have been soaring, many companies producing large cargo products have been affected to varying degrees, and their profits have been dwindling. Many foreign trade companies have "closed down" because they could not hold on any longer.

An industry insider revealed that a sofa manufacturing factory in Zhejiang was "affected" by the skyrocketing logistics prices .

It is understood that this is a sofa production factory of not small scale, and the sofas it produces are not of high value. However, due to the recent surge in freight rates, even a casual shipment costs tens of thousands of yuan, which is equivalent to doubling the customer's purchase cost. Therefore, many customers do not allow the factory to ship the goods and keep delaying.

Over a period of time, the factory warehouse had inventory worth more than 10 million yuan, and was unable to pay employee salaries and rent, utilities and other expenses.

In general, many large products that cannot be disassembled have large volume and high freight costs, making the overall freight cost extremely uneconomical. For factories and companies that produce these products, waiting and seeing seems to be the best option at the moment.

But the reality is that many furniture foreign trade companies have been in a very difficult situation recently. The high freight costs have doubled their pressure, and there is a lot of grief in the industry.

Freight costs rise, profits are squeezed, foreign trade companies say they can't afford it

It is not only furniture foreign trade enterprises that are affected by logistics prices, but also the textile foreign trade industry . Since the beginning of this year, textile foreign trade enterprises have suffered multiple shocks one after another, and the profits of many enterprises have been squeezed again and again, with low gross profit margins.

A practitioner with many years of experience said that the shipping cost for a trip is about 200,000 yuan , which is almost unacceptable to him. The key is that the shipping company has been delaying the shipment again and again, and he may even lose money on exports this year. It is really unbearable!

" Want to lie low but dare not lie low " may be the most real situation of many foreign trade enterprises. Profits are squeezed again and again, and news of customers suspending shipments keeps coming in. They only hope that one day they can successfully turn things around...

In the final analysis, high freight rates seem to have become the "culprit" in the eyes of many foreign trade people. Foreign trade companies complained and said that "2021 is the most difficult year." But as of now, the shipping market situation remains grim, and the congestion problem has not been solved. What challenges will foreign trade factories and companies face in the future?

Many practitioners believe that although the shipping prices have shown a slight downward trend in the recent period, due to the approaching holidays such as Christmas and Halloween, the purchasing power of foreign consumers continues to rise and the number of containers is not sufficient. Therefore, the shipping prices are not likely to be too friendly in the short term, and the shipping problem has not been fundamentally solved.

Under this situation, the best strategy for foreign trade companies is to respond to the ever-changing situation in a timely manner. Therefore, more and more foreign trade companies are trying to set up overseas warehouses and prepare goods in advance. When customers have needs, they can ship directly from overseas warehouses to meet customer needs faster and more comprehensively.

Work stoppage

Layoffs

foreign trade