How to find a reliable Chinese freight forwarder ?

How to find a reliable Chinese freight forwarder?

Table of Contents

China, often referred to as the "factory of the world," is inseparable from world trade, accounting for 15% of world GDP as of 2017, surpassing the United States alone. International cargo movement is required when importing Chinese products, and you will definitely trade with forwarders. According to unconfirmed statistics, more than 10,000 forwarders are registered in Shanghai alone. The total number of China is considered to be even more astronomical. Chinese aircraft carriers also have a bad reputation as they continue to commit fraud and other illegal activities that affect many of the legitimate Chinese aircraft carriers.

Moreover it is difficult to find a Chinese forwarder, notably because of the language barrier.

Then you can never control the reliability and quality of your forwarder. That's why it's best for you to work with DocShipper.

Introduction of China’s international freight forwarding industry

international freight forwarding

Entry into China's international freight industry is very easy and convenient. Currently, China has a registered capital subscription system. The registration of an international shipping firm does not require a one-time payment and can be paid over a long period of time (eg 50 years). This greatly reduces the difficulty of registration and more and more new setups are entering the industry. On the other hand, the influx of new power will bring new capital, human resources, and other important factors to the industry, improve the level of competition in the industry as a whole, enable customers to enjoy greater profits and reduce import and export costs. To .. On the other hand, it can also reduce quality of service in this industry. We often see cheap competition, a flood of malicious customers, and poor service. It has produced even more extreme consequences, such as cheating and other high incidents. A recent example is the Qingdao freight carrier fraud case mentioned in the news show.

 

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Among the many companies involved in China's international freight transport business, they can be broadly categorized into the following categories:

Branch of foreign giants in China

The international freight industry has developed for 5060 years in developed countries, especially Europe and the United States. Many giants have made a significant breakthrough into the Chinese market and built up their own branches in China to conduct their own business following China's reform and opening up, particularly after joining the WTO. DHL, Sinker, Dexon and other well-known companies are all in China.

China’s state-owned enterprises

In China, like any other industry, the international truck industry was founded by state-owned enterprises. There are many powerful companies today. Sinotrans is one of the leading companies with 2017 sales of US $ 9.53 billion.

Private enterprises Bâtiment moderne en verre à haute tour logiciel de développement financier ou concept d'entreprise technologique Photo Premium

One of the major highlights of China's reform and opening up is the launch of export machinery for Chinese products. Everyone can see how the international freight transport industry is growing as a vital part of the export engine. Private companies were also rapidly established and developed in this . The number of international cargo forwarders is very large. The following example illustrates this clearly. If you travel by bus to Ningbo, the eastern port of China, and listen to passengers' calls and chats, you are more likely to hear anything related to container exports. Or, when you enter the Ningbo office building, you'll often see company signs in the lobby on the ground floor, most likely to repeat the term international freight or international logistics.

Unregistered agency

The above 1, 2 and 3 are basically a collection of international freight companies officially registered in China. However, many companies have not yet been registered, and many individuals are involved in this international freight transport industry. We are still discussing the facts. If you go to Yiwu, a small goods wholesale center, you will find that many people in the international freight transport industry do not have a registered company. XXXX International Logistics is printed on the business card, so you can spend your time comfortably. But in reality, they still work in informal offices without legal registration. Don't be fooled into thinking that it's all Chinese doing this. On the contrary, many foreigners in Yiwu do. We will briefly summarize the target clients of the aforementioned four categories of organizations based on our own industry expertise. The first category of companies is multinational companies, serving international bulk buyers, importers and wholesalers. Most of the customers of the second category of enterprises are large state-owned enterprises in China, engaged in the procurement of transportation projects such as: B. Large-scale national development project. In short, the first and second categories of business services are primarily aimed at large and medium sized businesses, and their business focus is not on small and medium sized customers. Most of the latter two companies are SMEs

 

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The analysis of the business model of China’s small and medium-sized international freight forwarding companies

Several risks

Due to the huge size of China and its huge import / export market, there are many small and medium-sized international freight forwarding companies in China. Focus only on this segment of the FCL transport. Depending on the business model, the business models of small and medium-sized freight carriers can be broadly divided into the following categories.

Mainly based on CIF goods

Such businesses frequently amass a large number of high-quality resources, and their clients' shipping operations are based on FREIGHT PREPAID. Based on their existing fixed freight volume, such enterprises can frequently negotiate a very competitive sea freight pricing with the shipping company on a single or multiple routes. Customers, on the other hand, are well familiar with them. Depending on the market circumstances, they can then direct clients to shipping businesses that optimize their customers' benefits. These businesses often become market makers for specific subroutes. Optimize resources, develop distinctive advantages, and gain market leadership utilizing numerous technical techniques (for example, using an uniform SHIPPER ID to apply the same VIP fee to the route to the shipping firm). These advantages can continue for years or even decades after they are established. Because of this benefit, whether the customer is a direct carrier and recipient or a middleman, the price is very.

Several risks

Long-term stable customer changes

When a long-standing stable customer shrinks sharply, goes bankrupt suddenly, or changes jobs for a variety of reasons, there is no basis for negotiating your existence. Prices can no longer maintain their previous advantage. Ultimately, the transfer agent will offer the price based on the quantity.

Unfavorable changes in the cooperative shipping company

Shipping companies often change as the global economy develops, with unique profit targets and key markets. An obvious example is the Iran route on the Middle East route. Iran, a major economy in the Middle East, not only has very high domestic consumption, but also relies on its geographical advantage to provide transit services and broadcasting to some countries in Central Asia. The port route from China to Abbas Iran has always been the battlefield of various shipping companies. During the prosperous era, more than 10 shipping companies served Iran's ports. But US sanctions have changed it all. Probably the only shipping company currently operating Iran's routes is Iran's shipping (IRISLLINE). If the carrier relied on a previously estimated price, the carrier may not (or dare) provide service due to certain factors (such as penalties). You'll have to look for alternative options. You cannot, however, quickly create a relationship with the new shipping firm because you already had a tight relationship with the prior shipping company. In this case, the customer will probably lose.

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Mainly based on LOCAL service

From the perspective of China's export situation, containers destined for developed countries in Europe and the United States are currently using the FREEGHT COLLECT model (that is, the corresponding FOB). European and American buyers offer their own career to make sea bookings. There are two known reasons for this.

Foreign freight carriers offer highly competitive sea shipping rates to these European and American importers. Why can they give a very competitive price? There are several factors. One is that there is a large amount of fixed cargo that needs to be negotiated with the shipping company. The other is to use some tricks to offer importers low sea freight rates. There is no profit or small profit on the way, but the profit that should be added as a cost to the importer is remitted to SHIPPER in China.

Foreign consumers’ transportation requirements do not stop at CY-CY

Many international customers require door-to-door service. As such, they naturally trust local carriers in this regard. For example, German customers are certainly more likely to ask a German freight carrier for D2D shipping and customs clearance. The business process of exporting containers to Chinese ports, from factory pickup to shipping, can be broadly divided into the following sections. Container transportation = Reservation + Transportation from factory to departure port + Export declaration + Document confirmation. According to the terms of the FOB, bookings and document confirmations were performed by a customer-designated transfer agent. Prices are very high if they make shipping and export declarations (considering what I said above). Therefore, to save costs, many carriers separate filings and customs filings and use their own carriers to do this. Therefore, some forwarders are primarily focused on local services. These are primarily useful for some foreign trading companies or factories to file customs declarations. The trailers and tariffs they pay to foreign trading companies and factories will be lower than the cost of these designated carriers. They negotiated with the container truck company, including the billing period, as well as the freight and shipping companies mentioned above, and gained their own profits. When there are fixed crowds and lines, they get the advantage of good followers to ensure their own interests.

Their risk

The homogenization competition is fierce

This means that there are many companies in the market offering similar services, and many competitors are costly to potential customers to compete. This will inevitably bring many problems to such companies.

Unable to establish an effective competitive advantage

This is because most local forwarding companies do not have their own trucks and the peak season for shipping is before Chinese New Year. This season, the dilemma of lack of container trucks often arises. This creates a nasty opportunity for other opponents.

 

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Directly oriented to foreign customers

According to our experience, in China`s overseas change exports, customers have a greater favorable function than the dealers in phrases of unique change phrases, and frequently the critiques of customers are decisive. That is to say, the point of interest of Chinese exporters is presently simplest at the order itself, and the subsidiary phrases of the orders are frequently now no longer intentionally valued. If the consumer proposes that the freight forwarder is distinct through himself, the vendor will frequently agree. Therefore, many freight forwarding agencies in China have targeted their commercial enterprise on overseas customers. They have mounted relationships with many customers via exhibitions, emails or on-webweb page visits. These customers aren't always evolved in Europe and the United States, and a lot of them are from growing nations consisting of Asia, Africa and Latin America. Such freight forwarding agencies have received lots of orders via direct touch with customers, permitting customers to designate them as freight forwarders. Buyers also can get a reduced sea freight rate (in comparison to direct CIF phrases). Many of those agencies are placed in Shenzhen Guangdong. Shenzhen, as certainly considered one among China`s maximum evolved export markets, has a massive quantity of export orders. The worldwide freight forwarding agencies there have a large imaginative and prescient and may take over the products from the Chinese ports to the relaxation of the world. Their chance lies withinside the chance of terrible money owed, due to the fact the freight fees ought to be amassed with overseas customers, and terrible money owed might also additionally occur.

1+2+3 is a combination

The first, second, and third scenarios are ideal, however in reality, SMEs are engaged in the above 3 businesses, and the ratio is not fixed. The business may be a little more important, or it may have a greater stake in it. This is because the international freight market is currently a highly competitive industry in China. Many companies are added every day and many are retired, so many companies do not dare to go out of business. Situations are often the fourth category of enterprises.

 

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Consider these factors while selecting an international freight forwarder in China

International cargo includes knowledge and disciplines on all aspects of international trade, international logistics and export customs clearance. Office workers in the international freight transport business need to understand the needs of their customers and have the basic business skills to solve their problems. The following points should be considered when choosing a broker:

The forwarder’s personnel must have a basic understanding of a foreign language (especially English)

If he wants to do business with foreign customers, he needs to have a basic understanding of the world's major ports. He needs to understand the English expressions of some service requirements at the destination port and also clearly understand some of the Incoterms' key terms. When he talks to foreign customers, he often meets foreign customers who ask for special circumstances. All of the above must be deployed by a freight carrier with some English to understand the needs of foreign customers. If theDrapeau de shanghai, chine avec des monuments de renommée mondiale en papier coupé style illustration vectorielle Vecteur Premium coordinator of a Chinese freight company is not good at basic English communication, there is a great hidden danger.

The business advantage of the freight forwarder must be clear

China's export volume has determined that China's international freight industry has a big pie. The container FCL market segment has dozens of routes with dozens of carriers. Therefore, it is not possible for small and medium-sized international freight companies to gain an advantage on all departure ports or all routes. When you come across a company that has a strong advantage in major ports in China and can offer high quality prices on all routes. We recommend that you reject such companies altogether. Therefore, when looking for a freight carrier in China, you first need to understand what those benefits are. For example, the company said it has its own advantages on the Middle East route. If you have goods from China to the United Arab Emirates, you can think of this as an alternative partner.

The agency must be legally registered

Integrity is embodied in formal registration. You can defend your rights in the event of a dispute if you find a registered corporation. If he finds unregistered, he has no restrictions. If something goes wrong, he doesn't want to solve it, or is trying to cheat, you're in a very embarrassing situation. Therefore, when choosing a freight carrier in China, you should always check if it is a legally registered company. Ask them to provide relevant documentation that can prove their qualifications, such as: B. Business license.

It is preferable to work for a company that provides LOCAL service near the departure port

Freight carriers at the port of departure are usually familiar with the restrictions on the export of containers at the port of departure. Therefore, when exporting from Shanghai, look for a truck company in the Yangtze River Delta region (Shanghai and around Shanghai). The combination of the above three points will be safer.

What benefits do you get from a good Chinese freight forwarder?

The following are some of the advantages of using a good Chinese forwarder:

The most suitable freight forwarding service

This achievement is based on his many years of professional experience and the accumulated business benefits of many years. He knows the requirements of China's local shipping port and knows the strengths and weaknesses of calling different shipping companies at the same destination port. He offers you a variety of choices, so you can choose the price / performance ratio or high quality shipping depending on the nature of the goods.

Security

A desirable Chinese freight forwarder need to be a organization with high-quality reputation. Now that the freight forwarding enterprise is turning into increasingly international, dependable credit score is a prerequisite for all cooperation. It is suggested which you now no longer most effective search for reasonably-priced expenses and visit businesses which are low-cost vicious competition. This will incur greater fees or even be cheated.

 

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