WARNING-Collapsing Crisis of the Freight Forwarders

In recent months, the freight forwarding industry has witnessed a significant wave of companies collapsing. More than 30 companies including major players specializing in European and American lines, have faced financial troubles. Some collapsed due to cash flow issues, unpaid overseas warehouse fees, or fraudulent activities like using risky “water-running” accounts. Shippers and sellers have suffered the most.

Under the conditions, we need more caution when partnering with agents, with price checks and reliability being more crucial than ever.

Here are some suggestions to avoid dangerous forwarders:

1. Be cautious of prices significantly below market rate. If the price is significantly lower than the market price, it’s wise to conduct thorough background checks. Why are they offering low prices? They may use “water-running” accounts, or they might be facing the imminent risk of a broken capital chain and are trying to recover some funds to stabilize it.
2. If your goods are general cargo, choose reputable companies specializing in general cargo, and do thorough background checks to avoid businesses mixing sensitive goods with your cargo.
3. Be careful when dealing with companies who offers long payment terms, as large outstanding balances can lead to severe issues if the partner faces financial instability. During the long term, if something goes wrong and the forwarders’ clients’ payments are delayed, if the forwarders or overseas warehouses withhold cargo, who will bear the resulting costs that could amount to millions?

In conclusion, prioritize reliability over cost. While competitive pricing is essential, ensuring that your logistics partner is trustworthy is even more critical. The logistics industry has seen multiple collapses over the years, and it’s crucial to take steps to protect your business.