The booming cross-border e-commerce industry has created massive demand for logistics services, but it has also led to an influx of unscrupulous freight forwarders. Many businesses have experienced frustrating delays in deliveries, only to discover their freight forwarder had abruptly shut down operations.
"Four Shell Companies" Scheme: Another Freight Forwarder Collapses
Recent reports reveal a Shenzhen-based freight forwarding company allegedly operated through multiple shell companies - Yue* International, Ju* International, Kuai* International, and Xiao* Logistics. While the legal representatives differed between companies, all operations were reportedly managed by the same individual, Song**, with all shipments ultimately handled by Xiao* Logistics and Ju* International.
Business registration records show two of these companies were established in mid-2022, with interconnected legal representatives. The scheme began unraveling in July 2022 when shipments handled by Song** were allegedly held in overseas warehouses for extended periods without delivery. When questioned, Song** reportedly claimed shipments were "with trucking companies" or "in transit," while no actual progress occurred.
"They kept saying they were handling the issues, but nothing moved," one affected freight forwarder stated. Some July shipments weren't delivered until September, with subsequent cargo remaining warehoused for 90 days due to claimed high costs. One forwarder reportedly suffered losses approaching $110,000 after intervening to recover their goods.
Industry Chaos: Frequent Freight Forwarder Failures Leave Businesses Vulnerable
This case represents just one example of widespread issues plaguing the freight forwarding sector. Recent months have seen numerous reports of booking fraud, financial collapses, false declarations, and warehousing fees accumulating to millions.
In one notorious case, a Ningbo-based forwarder allegedly collected ocean freight charges from multiple clients, then transferred assets while claiming operational difficulties and demanding duplicate payments. The operator reportedly owes hundreds of thousands in unpaid fees while continuing business under a new company name.
Root Causes: Why Freight Forwarders Keep Failing
Industry analysts identify multiple factors contributing to this crisis:
- Platform Boom Fades: As offline retail recovers overseas, major e-commerce platforms like Amazon report declining traffic and significant losses, reducing seller shipments. Desperate forwarders sometimes resort to risky practices like ultra-low-cost customs clearance.
- Hyper-Competitive Market: The industry's rapid growth attracted many operators seeking quick profits without proper resources or expertise. Some establish temporary operations, undercut prices to attract business, then disappear after collecting payments.
- Complex Supply Chains: Cross-border logistics involve numerous vulnerable points where goods can be lost, damaged, or delayed. Unscrupulous operators often lack capacity to manage these risks effectively.
- Poor Vendor Selection: Many e-commerce sellers choose forwarders based solely on price or casual recommendations rather than thorough vetting, making them easy targets for fraudulent operators.
Protecting Your Business: How to Avoid Freight Forwarder Scams
For cross-border sellers, selecting reliable logistics partners is crucial. Consider these precautions:
- Verify Credentials: Check business licenses, registration dates, capital, and address history to assess stability.
- Research Reputation: Search for legal disputes, penalties, or negative reports about potential partners.
- Visit Facilities: For significant shipments, inspect the forwarder's operations, team, and warehouse capabilities.
- Compare Specializations: Identify providers with proven expertise in your specific logistics needs.
- Purchase Insurance: Protect valuable shipments against loss or delay through transport insurance.
Most importantly, remember that the lowest price often carries the highest risk. Sustainable logistics requires adequate margins to support proper service and risk management.