Recently, international logistics prices have been rising again and again, causing Chinese cross-border sellers to face considerable challenges.
A cross-border seller said helplessly: “The price of air tickets for business trips this year has doubled.” The recent continued rise in crude oil prices has affected the emotions of cross-border sellers. Since March, the fuel surcharges of some international logistics brands have experienced seven consecutive increases.
Some cross-border e-commerce platforms have also begun to take action. Amazon announced that starting from April 17, it will temporarily increase fuel and logistics-related surcharges for Amazon Fulfillment (FBA) in North America, Europe and other places.
Oil prices have brought about cost increases in many aspects.
According to the announcement, Amazon will temporarily increase fuel and logistics-related surcharges by 3.5% on Amazon Fulfillment (FBA) delivery fees in the United States and Canada from April 17, and will temporarily increase fuel and logistics-related surcharges by 1.5% on FBA delivery fees in many European countries.
Yang Yu (pseudonym), an Amazon seller who sells clothing, said that logistics freight accounts for more than 20% of operating costs, and based on this increase, net profits will fall by 10%.
But he also said that FBA is a rigid need and will not be abandoned because of rising costs. At the same time, from a competitive perspective, prices will not be raised immediately, but will wait and see first.
Another sporting goods seller, Chen Lin (pseudonym), said that his operating costs mainly consist of warehousing and inventory costs, and logistics costs account for a small proportion, so the impact of price increases will be limited. He also plans to stay on the sidelines and not increase prices for the time being.
Ding Linfeng, general manager of Shanghai Weida Shade Equipment Co., Ltd., said that Amazon’s fee increase will have little impact on the company because the company has warehouses in the United States and Canada and does not need to ship goods from the United States to Canada.
But the impact of rising oil prices on business is reflected in other aspects, such as raw material costs.
Ding Linfeng said that both PVC and polyester are refined from petroleum, so prices have increased a lot recently. “Some materials have already increased by 20% to 30%, and it will become more and more difficult to control the overall cost.” The company is currently in a wait-and-see stage, but if the price of raw materials continues to rise, it will eventually be reflected in the selling price.
Travel costs are also increasing.
Ding Linfeng gave an example, “Last year, the single air ticket for our business trip to Germany was around 9,000 yuan, and we usually travel in a team of 4 to 5 people. This year we plan to go to Germany in August, and the ticket cost has risen to more than 20,000 yuan, which doubles the cost of the air ticket alone. In addition to air tickets, other business trip expenses are also expected to increase.” In order to cope with the increase in this part of the cost, Ding Linfeng plans to streamline the business trip team to 2 to 3 people.
However, he said that a good attitude is needed at this time. “Don’t think of this as a cost, but as an investment.” In addition to Amazon, many international logistics platforms have increased fuel surcharges multiple times since March.
The official website of UPS (United Parcel Service) shows that the fuel surcharge has increased seven times in a row since March 2, from 32% effective on March 2 to 48.5% effective on April 13.
Zhang Zhouping, executive director of True Color Think Tank, said that the actual cost erosion will be more obvious for goods with low unit prices, large volumes or heavy weights due to rising logistics prices.
In the current context of multiple increases in FBA basic freight rates, the proportion of total corporate logistics costs continues to rise, which will further squeeze profit margins, especially for small and medium-sized sellers who rely on the low-price and volume model.
In addition, the current challenges faced by cross-border sellers are not only rising logistics costs, but also pressure on capital turnover caused by platform rules and operational challenges and changes in platform policies.
However, crises also contain opportunities.
Ding Linfeng believes that this year’s challenges will be even greater. Geopolitical conflicts have caused irreversible damage to the crude oil supply chain, and this impact will affect global sellers and markets.
However, the resilience of Chinese sellers has become more and more prominent in the face of challenges. He revealed that he has recently received more communication intentions from European customers. “They have found that Chinese sellers are the most stable under the current circumstances.” Ding Linfeng has re-planned the development direction for this year and plans to turn to tapping European customers. He is also considering entering new markets such as Australia. He also plans to rely on domestic advanced manufacturing capabilities and innovation capabilities to create more high value-added products to seize the opportunity.
Zhang Zhouping said that sellers can respond to the crisis by optimizing cost and pricing models, accelerating logistics and channel diversification, and strictly abiding by compliance and the bottom line of capital flow.
Currently, emerging markets and technologies still give sellers room for development, such as blue ocean incremental space in emerging markets, refined operational dividends driven by AI technology, and windows for brand transformation, etc.
