The rapid growth of cross-border e-commerce has revealed significant vulnerabilities in global supply chains. A recent incident involving a Shenzhen-based freight forwarding company has sent shockwaves through the industry, highlighting the precarious nature of international logistics operations.
Mounting Port Fees Threaten Freight Forwarders' Survival
A logistics provider specializing in U.S. FBA (Fulfillment by Amazon) first-mile services has encountered severe financial difficulties, leaving eight containers stranded at American ports with accumulated demurrage charges exceeding $120,000 (approximately ¥907,800). The company, based in Pinghu, Shenzhen, reportedly handled substantial volumes for multiple freight forwarders, including one client accounting for 200 cubic meters of cargo.
While a secondary freight forwarder has temporarily retrieved two containers by advancing payments and storing them in overseas warehouses, they've demanded all cargo owners collectively cover demurrage fees and pay additional shipping costs before releasing goods. This leaves many sellers facing the dilemma of paying shipping fees twice while their merchandise remains undelivered.
Six containers remain at ports, with four having exceeded 70 days of detention. The shipments originated from Yantian Port bound for New York and Los Angeles between early July and early August. The primary forwarder allegedly owes over ¥1.3 million in unpaid transportation fees to larger logistics partners, creating a chain reaction that leaves smaller cargo owners stranded with paid-for goods stuck in limbo.
Soaring Demurrage Costs Intensify Industry Instability
Container xChange's latest Demurrage and Detention Benchmark Report reveals U.S. ports lead global detention charges. New York Port imposes the world's highest demurrage fees at $3,182 per TEU (twenty-foot equivalent unit) after 14 days, followed by Long Beach, Los Angeles, Oakland, and Savannah ports.
The report indicates global average demurrage fees increased 38% from $586 in 2020 to $868 in 2021 for standard containers after two weeks. Persistent shipping market disruptions, combined with exorbitant detention fees, labor strikes, and port congestion, have created unprecedented challenges for freight forwarders, leading to widespread industry instability.
Risk Mitigation Strategies for E-Commerce Sellers
With low barriers to market entry resulting in varying quality among logistics providers, cross-border sellers must exercise heightened diligence when selecting partners. Key considerations include:
1. License Verification: Thoroughly examine business licenses, tax registration certificates, and other official documentation to confirm legal compliance.
2. Reputation Assessment: Research companies through industry forums and online reviews to identify providers with problematic histories.
3. Capability Evaluation: Assess operational scale, service networks, and shipping line partnerships to gauge true service capacity.
4. Contract Scrutiny: Carefully review terms regarding detention fees, delay compensation, and liability allocation.
5. Risk Awareness: Understand inherent international trade risks including customs inspections and port congestion, establishing contingency plans with providers.
6. Diversification: Distribute shipments across multiple forwarders to mitigate concentration risk.
7. Communication Protocols: Maintain regular updates throughout transit to enable prompt issue resolution.
8. Insurance Coverage: Secure cargo insurance against loss or damage during transit.
E-commerce businesses must prioritize reliability and risk management over cost savings when selecting logistics partners. Only through partnerships with financially stable, reputable forwarders can merchants ensure timely deliveries, minimize operational disruptions, and achieve sustainable growth in the volatile cross-border trade environment.