The price of ocean freight to the US has risen above 20, and the seller loses 1,000 yuan per order

Cross-border people are experiencing an unprecedented test. At the beginning of the year, the industry's enthusiasm spilled over and attracted a large number of practitioners. The price war soon got out of control, and sellers' profits were squeezed again and again; new products were difficult to promote, and the old operating methods were difficult to work, and many operators fell into confusion.

On the other hand, freight rates have soared. The current market price for ocean freight to the United States has exceeded the 20 mark, and the price for air freight is also hovering around 60, and the cost remains high. Sellers complain that the freight rate has risen so much that they are vomiting blood, and they are just moving bricks for others every day. In contrast, the profits of shipping companies have skyrocketed. The mid-year bonus of employees of a shipping company has been issued to hundreds of thousands, which is surprising.

Shipping costs have skyrocketed, with the US line exceeding 20

As August begins , new surcharges from shipping companies are gradually taking effect, and a new wave of price increases has appeared in the shipping market. Cross-border e-commerce sellers are complaining. Some sellers report that shipping prices have exceeded 20, and are expected to rise further in the second half of the year.

Other sellers feel the same way:

"Why has the shipping cost increased so much recently? I am crying. The prices quoted by the two freight forwarders are one more drastic than the other."

"The freight rate has increased, and it hurts everyone. Where is the profit?"

"The prices in Meisen are really... going crazy"

Sellers reported that the price of express delivery fluctuated, and sea freight has become the first choice, but the current price of sea freight has caught up with the price of air freight two years ago. In response, some sellers said helplessly that they could only afford the slowest sea freight, and Star Express's US East Coast Express had already quoted 18.

The editor asked several freight forwarders about the current shipping costs and learned that the shipping prices in August have been "rising". The prices of Matsun have exceeded 20, and the prices of Matsun have exceeded 20 in a limited time. The prices that have not reached 20 are also approaching 20. The freight forwarders said, "Matsun is basically 20+", "20+ is already the market price, and there will be no profit if it is lower", and "our prices in the East Coast of the United States were 21 last week."

Due to the recent slow delivery time of Zim, some companies have stopped shipping with Zim and switched to shipping with Matson. "It takes 40 to 50 days for Zim to deliver goods now, and many June shipments have not yet been picked up in containers."

Air delivery prices are not optimistic either. Due to the domestic epidemic and heavy rain, some flights were cancelled. "Air delivery to the United States costs more than 60, which is not even cheaper than express delivery," said a freight forwarder.

After the price went up, sellers hesitated to ship. One practitioner said: "Going back and forth between customers and freight forwarders every day for the shipping cost is really driving me crazy. I booked a container for Costa Rica six times. I asked the freight cost and replied to the customer, but the customer was scared by the freight cost and kept silent. After a while, he wanted the goods again and asked about the freight cost. I finally found a space, but the customer was scared by the freight cost and kept silent again... It goes on and on like this."

As for the future trend of shipping prices, practitioners have different views. "After August, the traditional peak season in September will arrive and the market will increase. The increase in shipping costs will not be high. It depends on how the freight forwarders quote." Mr. Liao said, while more freight forwarders believe that if the US port problem is not resolved, the price will not fall and will rise in the future."

Loss of 1,000 yuan per order , sellers are still in a low-price spiral despite high shipping costs

Freight costs continue to rise, but many Amazon sellers are in a price spiral. One seller said that almost all of the top 100 categories he sells are in a price spiral, and he thought the freight costs had dropped, but when he asked the freight forwarder, he found out that it was impossible to drop the price, and now a cabinet costs nearly $20,000.

Despite such high shipping costs, similar products have not increased in price, but are instead in a downward spiral, which puzzles the sellers: Are all products being delivered from South America, or are they being delivered by Superman for free?

The logistics costs are high, the raw material prices are high, and the advertising costs are high. Under the situation of "three highs", many sellers are making a loss to gain publicity, and are struggling to survive with a loss on every sale.

A seller complained on the Zhiwubuyan forum: I found that for a similar product in Europe, our price is 60 euros, while our competitors sell it for 39 euros. If we only calculate the commission, VAT, and FBA delivery fee, there is no profit. This does not include the shipping fee. With such high shipping prices, are sellers losing money and squeezing out their peers? Several other sellers calculated their losses↓

“——I can’t understand how a product can lose more than ten yuan per order and persist for half a year;

——The previous company's product could lose money for 19 months;

——I lost 260 yuan on one order, but I’m still doing it;

——For large items, the loss is 1,000-1,500 RMB per order. The boss has lost 2-3 million RMB, but he is holding on firmly.”

Sellers who lose more than 1,000 yuan per order but still support the business make people feel distressed and angry. Is it really necessary for cross-border sellers to spend money on charity? These sellers in the low-price spiral can be basically divided into the following two categories.

1. Some sellers are forced to clear their inventory. Some of them saw the explosion of online channels during the epidemic last year and prepared too much goods. As a result, there is not much demand in the market this year, resulting in bleak orders. However, due to supplier payment and funding issues, these stocks must be cleared. Another group of sellers who are clearing their inventory are afraid that Amazon’s account suspension will affect them, or their accounts have been blocked, so they clear the inventory at a low price to recover the payment.

2. Squeeze out the sellers who are making profits for themselves . These sellers usually enter the market with strong capital, and start with a low-price spiral, selling at a loss to squeeze out their peers, and then raising their own prices. If the price increase fails, they may continue to sell at a loss, put the product link on the homepage to increase sales, make the data beautiful, and sell it ashore. This group of people is the most terrible!

Due to high shipping costs, the profits of many sellers have been severely eroded. Some people have been forced to abandon old products that do not bring any profit and develop new products. However, with advertising costs soaring and storage capacity limited, it is difficult for many sellers to launch new products.

One seller said helplessly: "I am not making any money this year. I am too embarrassed to tell people that I am selling on Amazon." Freight forwarders also said that they are not making any money. The high logistics fees have actually enriched the pockets of many shipping companies.

The mid-year bonus is hundreds of thousands, the shipping company is making too much money

"Some shipping companies this year are really generous. My sister received a mid-year bonus of hundreds of thousands." An industry insider expressed such emotion. Some colleagues analyzed that this amount of bonus is generally not available, but it is not impossible if the high price commission and various subsidies are added.

Many shipping companies have indeed made money this year, and some can even be called money printing machines! Last month, COSCO Shipping Holdings announced an announcement of expected performance increase in the first half of 2021, and the company expects to make a profit of about 37.1 billion yuan.

According to Tonghuashun, COSCO SHIPPING Holdings' net profit in the first half of last year was 1.137 billion yuan, which is 32 times that of last year. The net profit of 37 billion yuan in the first half of this year is more than double the total of the past three years. On average, COSCO SHIPPING Holdings made about 200 million yuan a day in the first half of this year.

Is there something fishy behind these shipping companies' huge profits? Recently, a US manufacturing company sued several large shipping companies, including COSCO Group. The lawsuit mentioned that these companies used "unfair and unreasonable" means to manipulate the spot container transportation market from China to the west coast of the United States, causing spot container freight rates to soar.

The shipping companies made money, but the sellers lost their profits, and some foreign trade factories were also in a bad situation. The current situation of a factory is that many cross-border sellers are not placing orders or shipping goods. The factory has about 50 high cabinets with a value of 10 million RMB. Such a factory will not be able to survive in the future!

Factories, cross-border sellers, and shipping companies are actually part of the same chain. If profits are not evenly distributed for a long time, the entire freight chain will inevitably be impacted. We hope that the shipping companies that have been sued can set reasonable prices and that freight rates can return to reasonable levels soon.

Shipping, low price, Amazon