Cross-border e-commerce sellers are facing increasing uncertainty as freight forwarding companies continue to collapse like ticking time bombs. Broken capital chains, bankruptcy filings, and companies collecting shipments at low prices only to disappear - these scenarios are playing out repeatedly, leaving sellers vulnerable. Paying for shipping no longer guarantees smooth delivery, as reality delivers harsh lessons.
Industry Shockwaves: Frequent Freight Forwarder Failures
Recently, a "Notice of Situation" issued by a leading Shenzhen-based freight forwarder sent shockwaves through the cross-border e-commerce community. The company revealed that 11 shipments entrusted by a Shenzhen supply chain partner were left unclaimed at their destination ports. As of October 15, 2022, the accumulated container detention and storage fees reached approximately ¥1.943 million (39.472 million yen), with costs continuing to rise.
Before the industry could digest this news, another Shenzhen-based company specializing in FBA first-mile services to the U.S. was exposed for leaving eight containers stranded at American ports due to financial difficulties, incurring massive demurrage charges.
The FBA service provider clearly couldn't cover these exorbitant fees. Worse still, the company had accepted shipments from multiple freight forwarders, including one major forwarder that had entrusted 200 cubic meters of cargo. Currently, only two containers with relatively lower fees have been retrieved by a secondary forwarder who advanced payment, temporarily storing them in overseas warehouses.
Now, this secondary company demands all cargo owners share the demurrage costs and pay shipping fees again before releasing goods from U.S. warehouses for final delivery. The remaining six containers continue accumulating port fees exceeding $120,000 and climbing.
The Demurrage Black Hole: Who Will Pay?
The staggering demurrage fees total $125,646 (approximately ¥904,651 at current exchange rates). These six containers all originated from Yantian Port bound for either New York or Los Angeles, with sailing dates ranging from early July to early August. Most arrived in mid-August, meaning four containers have already exceeded 70 days in port, with fees mounting relentlessly.
Power Struggle: Small Shippers Bear the Brunt
Among these shipments, one major forwarder reportedly owes over ¥1.3 million in unpaid freight charges to a primary consolidator. With entangled interests and the forwarder refusing payment, the consolidator lacks funds to retrieve stranded U.S. containers. Ultimately, small shippers face the heaviest burden - not only losing prepaid shipping fees but potentially facing massive demurrage charges, overseas storage fees, and domestic U.S. delivery costs.
Bloodbath in Freight Forwarding: Consequences of Cutthroat Competition
The current freight forwarding landscape resembles a bloodbath. Survival-driven price wars have escalated to unprecedented lows, with industry insiders darkly joking: "Any forwarder that can't offer free service isn't a good forwarder; any that can't refund money isn't excellent."
Facing this brutal environment, some forwarders attempt alternative paths to mitigate losses, though fraught with challenges. Others choose dramatic exits through bankruptcy or disappearing acts, leaving clients with endless headaches and chaos.
How Can Cross-Border Sellers Protect Themselves?
Given this turmoil, how can e-commerce sellers safeguard their shipments? Consider these protective measures:
- Avoid blindly chasing low prices: As cross-border platforms flourish, more sellers export large volumes, fueling forwarding price wars. When selecting forwarders, don't fixate on price alone. Scrutinize whether quotes are transparent and if the forwarder understands your cargo.
- Research forwarder backgrounds thoroughly: Evaluate companies across multiple dimensions - timeliness, service, stability, and channels - not just cost. Investigate company size, staff numbers, and establishment time. Assess operational expertise, logistics coordination, warehouse standards, and problem-resolution capabilities.
- Sign detailed compensation contracts: Negotiate clear terms for lost cargo compensation and formalize agreements. Some forwarders change attitudes post-shipment; defined liabilities prevent disputes.
- Purchase cargo insurance: Like auto insurance, freight coverage mitigates risk. When accidents occur, insurance compensation reduces losses.
- Diversify risk across multiple forwarders: Avoid concentrating shipments with one provider. Spread volume across several reputable forwarders to minimize exposure.
- Monitor shipments in real-time: Track cargo movements closely. Address anomalies immediately with your forwarder.
- Select reputable overseas warehouses: Partner with established, professional warehouses abroad to prevent additional complications.
- Stay informed on industry developments: The cross-border sector evolves rapidly. Adapt logistics strategies to navigate changing conditions.
Cross-border e-commerce presents enough challenges without unreliable forwarders. By applying these precautions, sellers can better navigate risks and ensure goods reach their destinations safely.