General

As the middleman between the owner and the carrier, the freight forwarder has had a hard time recently. The "constant decline" of ocean freight, the decrease of freight volume and the low degree of digitalization have all become the difficulties faced by "middlemen".

"Driven by the global market environment, the international trade freight forwarding industry is likely to usher in a round of large-scale integration." The insiders interviewed said that, with China's transformation from a trading power to a trading power, the freight forwarding industry will continue to improve its service level in competition, and move towards high-quality development, digital transformation, and standardized services.

In two years, the freight forwarder has changed from looking for ships to looking for goods

Generally speaking, the third quarter is the traditional peak season of global container shipping, and the price will also "rise with the tide". However, this year's "peak season is not prosperous", and instead, the price of major global shipping routes will "fall precipitously". According to the Baltic Sea Freight Index, by the end of September, the Baltic Sea container shipping price had decreased by 63.8% compared with the same period last year, of which the freight rate of China/Far East North America West Coast route had dropped by 85.7% compared with the highest level last year.

After the National Day, freight prices did not improve slightly. On October 21, the Shanghai Shipping Exchange's latest comprehensive freight rate index for export containers in Shanghai was 1778.69, down 1.9% from the previous period.

"From the craziness of 'one box is hard to find' to the fact that there are too many ships and too few goods, the freight forwarders have been on a roller coaster in the past two years." Wei Feng, general manager of Jiangsu Meishe Supply Chain Management Co., Ltd., said that shipping was too crazy last year, and the price generally skyrocketed. The shipping cost of a container was basically more than 10000 dollars. Many customers take the initiative to find them to make inquiries and book shipping space, which is really "hard to find" when it is hot. Since this year, with the sharp drop in shipping costs, their main work has changed from finding ships to finding goods, from being only an export freight forwarder to being mainly transferred from exports to imports in the near future, forming a closed loop of the import and export chain.

Recently, some offshore routes have even experienced "zero" freight, that is, the basic ocean freight is exempted, and the cargo owner only needs to pay fuel surcharges, terminal operation fees, customs clearance fees, warehousing fees, distribution fees, etc.

"The sharp fluctuations in freight rates reflect the relationship between supply and demand and the results of market games. In addition, freight rates are also affected by factors such as the COVID-19 and the conflict between Russia and Ukraine." In the view of Li Linhai, Secretary General of the Shanghai International Freight Forwarders Association, freight forwarding enterprises will inevitably be impacted in the short term, including turnover and profits.

What's more, disputes, thunder and other incidents in the freight forwarding logistics industry also began to appear. According to the Notification of Situation issued by Shenzhen Toutou Freight Forwarder Kunxin International Freight Agency Co., Ltd. on October 18, the company received a booking commission from a supply chain enterprise in Shenzhen in January 2022 to ship a total of 14 containers of 11 shipments from South China to Japanese ports. However, 14 containers were finally detained after the declaration of cargo information was found to be inconsistent with the actual situation when the port was inspected by the Japanese customs. As the goods have not been picked up at the destination port, it is estimated that the container overdue use fee and storage fee have reached 1.943 million yuan as of October 15. In order to stop the loss in time and reduce the cost to the minimum, Kunxin International Freight Forwarding Co., Ltd. proposed corresponding solutions to the owner.

When will the ocean freight reach the bottom?

HSBC pointed out in a new report that the sea freight is likely to fall to the level of 2019 at the end of this year, and the Shanghai Container Freight Index (SCFI) will reach the bottom by the middle of 2023.

"In the future, the trade center will continue to shift to Southeast Asia, China's industrial structure will be further adjusted, China's status as a major importer of international trade will gradually be established, and China will become a buyer's market, and gradually master the leading power of international trade." Li Linhai said that from the three trends, the focus of the international freight forwarding industry in the future is how to seize the market opportunities in Southeast Asia, It also transformed the mode of foreign trade shipment from FOB mode (cargo booking by consignee) to CIF mode (cargo booking by shipper), and aimed at the adjustment of China's industrial structure, followed the Chinese industry to "go global".

Digital "forcing" the freight forwarding industry to turn to integrated services

China is a major importer and exporter of international trade. Over the past 10 years, the scale of China's trade in goods has been rising, and the volume of imports and exports has reached new highs, increasing from 24.4 trillion yuan in 2012 to 39.1 trillion yuan last year. Since 2017, China has maintained its position as the largest country in the world's goods trade for five consecutive years. Among them, about 90% of China's export trade is completed by container shipping.

Since the second half of 2013, the global economy has slowly recovered from the crisis.

"In the past 10 years, a large number of freight forwarding enterprises have been registered in China, accounting for more than 60% of the total number of freight forwarding enterprises, mainly private enterprises," said Zhang Jun, general manager of Fanjia Information Technology (Shanghai) Co., Ltd.

China's economy continues to open to the outside world, driving the vigorous development of the international freight forwarding industry. According to the data released by the China International Freight Forwarders Association, from 2015 to 2020, the operating income of China's top 100 international freight forwarding logistics enterprises increased from 330.47 billion yuan to 535.29 billion yuan, with an annual compound growth rate of more than 10%.

However, the new freight forwarding enterprises will naturally have many problems.

"The scale of freight forwarding enterprises in China is relatively small, and the number of employees in most freight forwarding enterprises is about 50." Zhang Jun analyzed that compared with major developed countries in the world, Chinese freight forwarding enterprises have problems such as decentralized service functions, backward operation and management models, low comprehensive service capabilities, and low degree of digitalization of information technology.

"Freight forwarders need to provide customers with all logistics and documentation services in the trade process, and the requirements for hardware are not very high." Wei Feng said, for example, there are about 100 freight forwarders in Yangzhou, many of them are mom and pop stores, and they can operate with three or five staff members and one or two customers. As long as there is a customer service relationship, we can survive through service.

Zhang Jun said that with the rapid development of digital technology, the information island on the supply chain has gradually been eased, the original industry barriers have gradually loosened or even been broken, shipping companies, e-commerce, retail and other giants have begun to penetrate the freight forwarding industry, and new formats may soon emerge.

Take Maersk, a liner giant, for example. It not only began to deploy new energy ships, but also gradually extended to the two ends of the value chain, such as land transportation, air transportation, logistics, etc. The six new energy ships it ordered are driven by methanol dual fuel, which is expected to reduce the emission of 800000 tons of carbon dioxide annually.

"The involvement of upstream shipping companies and the cross-border of e-commerce and retail giants continue to squeeze the market share of traditional freight forwarders, but also broaden the vision of freight forwarders." Zhang Jun said that in today's rapid development of networking and digitalization, freight forwarders are increasingly difficult to profit from information asymmetry, and will return to the essence of service in the future. As the development of e-commerce has changed the way of trading, some freight forwarders have seen the opportunity to take the lead in extending cross-border e-commerce services, such as Amazon's overseas warehouse services. The squeeze of shipping companies will force freight forwarders to pay more attention to the extended services of the supply chain, such as integrated offline comprehensive services.

The research and analysis of CICC pointed out that the international freight forwarding has changed from a single link service to an integrated service, and the core competitiveness in the future will be embodied in refined management and control, network coverage and integration capabilities.

Zhang Jun suggested that we should look at freight forwarding from the perspective of supply chain and redefine freight forwarding from the perspective of supply chain. We should extend the original narrow service space to deeper user needs, and integrate loose matchmaking offline operations into complete delivery services. All these are inseparable from the digital cross scenario application capability of information technology, which is also the core competitiveness of the international trade freight forwarding industry in the future.