Beware! 34,000 freight forwarders have "abnormal operations"

Cross-border e-commerce has become a new highlight of my country's foreign trade. According to the Ministry of Commerce, there are more than 120,000 cross-border e-commerce companies in my country. In the first quarter of 2024, cross-border e-commerce imports and exports amounted to 577.6 billion yuan, an increase of 9.6%, of which exports amounted to 448 billion yuan, an increase of 14%.

Riding on the rapid development of cross-border e-commerce, cross-border e-commerce logistics companies are developing rapidly. By the end of 2022, the number of international freight forwarding companies in the Ministry of Commerce's filing system had reached 86,915, a year-on-year increase of 7.2%.

International freight forwarding companies are an important guarantee for cross-border e-commerce companies to ensure that their products can cross borders and reach the target market smoothly. However, due to fierce market competition and broken capital chains, freight forwarding companies have frequently collapsed in recent years. Therefore, sellers must be careful to select freight forwarding companies, conduct in-depth inspections and evaluations from multiple parties, and cannot make hasty decisions based on the single factor of "low price".

More than 34,000 freight forwarders in China have "abnormal operations"

According to Qichacha, as of June 8 this year, there were 34,142 international freight forwarding companies with "abnormal operations" nationwide, of which more than half were located in Guangdong (17,228). There is a saying in the cross-border circle: "Look at Guangdong for cross-border e-commerce nationwide, and look at Shenzhen for cross-border e-commerce in Guangdong." Shenzhen is a gathering place for cross-border e-commerce companies, so the number of freight forwarding companies as supporting resources is also quite large. Therefore, it is no surprise that most of these "abnormal operations" freight forwarding companies in Guangdong Province are concentrated in Shenzhen, with a total of 13,819, accounting for more than 80%.

It is worth noting that among these freight forwarding companies with "abnormal operations", there are as many as 8,349 companies that have been established for more than 10 years. And this is only the search results containing the keyword "international freight forwarding". If the search results containing the keyword "international logistics" are added, the number will be even greater. In addition, there are quite a few companies that do not contain either the keyword "international freight forwarding" or the keyword "international logistics", such as Shenzhen Quanyi Cross-border Supply Chain Co., Ltd., which was previously exposed.

Displaying "abnormal operation" means that the company has problems in some aspects, such as failure to submit annual reports as required, concealing the truth or falsifying information in public disclosures, and being unable to be contacted through the registered residence or business premises.

Such enterprises may face chaotic internal management, irregular operations and even the risk of fraud.

When choosing to cooperate, sellers cannot simply reject a business because it shows abnormal operations, but they cannot take it lightly either. Further in-depth investigation and understanding of the specific reasons for the abnormalities, current actual operating conditions, financial conditions, past business performance, etc. are required.

If, after a thorough assessment, it is believed that these abnormalities will not have a significant adverse impact on cooperation, and the enterprise has feasible improvement measures and good development prospects, then cooperation can be considered, but the risk is definitely relatively high. In particular, the reason for "operational abnormality" is that the registered residence or business premises cannot be contacted.

For example, Hangzhou *Net International Logistics Co., Ltd., which was mentioned to Yien.com by a whistleblower last year, is currently showing "abnormal operation" because it cannot be contacted through the registered residence or business premises. It was listed in the abnormal operation list by the Hangzhou Gongshu District Market Supervision Administration on December 6, 2023.

According to the whistleblower, the company owed a huge amount of compensation to other freight forwarding companies and employee wages. "The office was vacated because of a customer disturbance and the police were called." However, it has since continued to collect payments from existing customers in a new location and under a new company name.

However, the legal persons of these new companies were all replaced by relatives of the company's bosses, such as brothers, cousins ​​and their spouses.

Therefore, if you encounter a freight forwarder that is listed in the abnormal operation list because you cannot get in touch with it through the registered residence or business premises, you must not only be vigilant, but also pay attention to identifying other companies associated with it.

If you are unable to understand exactly or still have major doubts after evaluation, then in order to avoid potential losses and troubles, it is recommended that you give priority to cooperating with freight forwarding companies with more stable and reliable business conditions.

After all, cooperation with freight forwarding companies involves important aspects such as cargo safety and transportation efficiency, and you cannot take risks easily.

In particular, in recent years, a large number of international freight forwarding companies and international logistics companies have gone bankrupt. Last year, Yien.com made a rough estimate that in less than six months, as many as eight freight forwarding companies went bankrupt. After these companies went bankrupt, some even simply left, leaving many sellers or freight forwarding peers with no way to protect their rights. As a result, sellers shouted helplessly: "In the future, we will not ask for timeliness or price when shipping, but only for not running away."

In this context, it is necessary to be extra cautious when choosing a freight forwarding company.

Shenzhen revokes business licenses of 250 freight forwarders

On May 28, the Shenzhen Municipal Administration for Market Regulation issued the "Announcement on Revoking the Business License of a Company that Has Been Suspended for a Long Time and Is Not Operating."

Een.com found that among the companies whose business licenses were revoked, there were 112 freight forwarding companies (61 international freight forwarding companies and 51 international logistics companies).

Why were these freight forwarders’ business licenses revoked?

In the announcement, the Shenzhen Municipal Administration for Market Regulation stated that this was because the batch of companies had been in a state of long-term suspension and non-operation, and their actions constituted an illegal act as referred to in Article 211 of the Company Law of the People's Republic of China, namely, "a company has not opened for business for more than six months after its establishment without justifiable reasons, or has voluntarily suspended business for more than six consecutive months after opening."

In accordance with Article 211 of the Company Law of the People's Republic of China, the Shenzhen Municipal Administration for Market Regulation decided to revoke the business licenses of these companies.

In fact, before this, on June 13, 2023, the Shenzhen Municipal Market Supervision Administration also revoked the business licenses of a number of companies, including more freight forwarding companies, a total of 138 companies (91 international freight forwarding companies and 47 international logistics companies).

Adding up the two times, the number of companies whose licenses were revoked reached 250.

At the same time, Ennet found that these companies were also listed in the abnormal operation list by the Market Supervision Administration or the Credit Supervision Section for failing to submit annual reports as required. For example, Shenzhen Huakaida International Freight Forwarding Co., Ltd. was listed in the abnormal operation list by the Shenzhen Market Supervision Administration Yantian Bureau and the Credit Supervision Section of the Yantian Bureau four times from 2021 to 2023 for failing to submit annual reports as required.

Of course, there are also companies that have been included in the list of abnormal operations because they could not be contacted through their registered residence or business premises, and failed to submit annual reports as required. For example, Shenzhen Haoyi International Freight Forwarding Co., Ltd. was included in the list of abnormal operations by the Yantian Bureau of the Shenzhen Municipal Market Supervision Administration in 2021 for failing to publicize its 2020 annual report within the prescribed time limit. In 2022, it was included in the list of abnormal operations by the Credit Supervision Section of the Yantian Bureau because it could not be contacted through its registered residence or business premises.

It is also worth noting that the oldest of these companies has been established for nearly 10 years, while the youngest has been established for only three or four years.

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International Freight Forwarding