AMZ123 learned that union longshoremen at U.S. West Coast shipping ports failed to reach a labor agreement with freight companies and terminal operators. Although both parties promised that the port will continue to operate normally, with the arrival of the traditional peak season for foreign trade, concerns about freight delays continue.
It is reported that many shippers have currently rerouted cargo to ports on the East Coast and Gulf of Mexico coast to hedge against delays caused by failed labor negotiations on the West Coast. Some of these ports are now experiencing more severe congestion and backlogs of ships.
Logistics issues have always been one of the most troubled pain points for cross-border people. Delivery delays caused by worker strikes and port congestion can easily affect the pace of peak season stocking, and high shipping costs continue to eat away at sellers' profits. And is not only small and medium-sized sellers, but the performance of top sellers is also affected by logistics problems.
has a long way to go to market, and high shipping costs will impact its performance!
Home furnishing sales company Zhiou Home Furnishings, which has completed five rounds of financing in three years, has had many twists and turns in its path to IPO. It was forced to suspend its review due to financial problems. Recently, Zhiou disclosed its response to the Shenzhen Stock Exchange’s third round review inquiry letter.
(1) Revenue is rising steadily, but gross profit margin is declining year by year.
announcement shows that Zhiou’s revenue from 2019 to 2021 is 2.326 billion, 3.971 billion, and 5.967 billion respectively. The compound annual growth rate of is 60.19%, showing The development trend of stable growth.
▲The picture comes from the Zhiou Home Announcement
However, in terms of net profit, benefiting from the rapid growth of revenue and better cost control during the period in 2020, the net profit for the current period increased significantly year-on-year, reaching 380 million. However, in 2021, due to the sharp increase in sea freight, fluctuations in exchange rates, and related expenses, net profit will drop significantly year-on-year.
Looking at Zhiou’s gross profit margin in the past three years, there has been a gradual and slight downward trend. In 2020, due to the increase in the proportion of B2B channel revenue, the gross profit margin of this sales model is relatively low, and affected by the slight increase in shipping costs in the third and fourth quarters, the gross profit margin for the current period has decreased. In 2021, due to the sharp increase in sea freight, the gross profit margin dropped significantly compared with the previous year.
(2) The proportion of shipping costs has soared, which may be a key factor in the decline in performance
Judging from the performance changes of Zhiou in recent years, freight costs are undoubtedly a crucial influencing factor.
Ocean freight to Europe accounted for 6.83% of ’s main business costs in 2020, and increased to 15.59% in 2021, up to 468 million yuan.
Since 2021, affected by the global epidemic, the supply and demand in the shipping market have been imbalanced, causing shipping prices to continue to soar. 's shipping costs to Europe have increased by 281.83% compared with 2020, and the gross profit margin of 's main business has dropped by about 5 percentage points year-on-year. .
▲The picture comes from the Zhiou Home Furnishing Announcement
According to Zhiou’s calculations, the increase in sea freight will cause the company’s gross profit to drop by 282 million yuan year-on-year in 2021. also means that sea freight will rise or its gross profit margin and operating performance will decline. the most important reason.
(3) Freight prices are expected to fall, and Zhiou’s net profit decline will narrow.
From January to March 2022, Zhiou’s revenue fell by 4.07% year-on-year, but operating costs increased by 6.79% year-on-year, mainly due to the continued rise in shipping prices since 2021.
▲The picture comes from the Zhiou Home Furnishing Announcement
However, as relevant domestic and foreign departments have taken relevant regulatory measures in response to the abnormally high shipping prices, and a large number of container companies have begun to expand production, the tight supply of transportation capacity is expected to be alleviated.
Zhiou said that shipping prices will gradually stabilize starting in the fourth quarter of 2021, and will show signs of reversing the upward trend in the first quarter of 2022.
▲The picture comes from the Zhiou Home Furnishing Announcement
According to the month-on-month changes in the average index of the China Export Container Freight Index (CCFI) from the second half of 2020 to the present, Since the first quarter of 2022, the growth rate of the freight index has gradually slowed down. Slow down or fall back, with a month-on-month decline starting in March.
▲The picture comes from Zhiou Home Furnishing Announcement
For this reason, Zhiou believes that the company's profitability will be greatly restored. 's current decline in net profit in the first quarter of 2022 has narrowed significantly compared with the 54.77% year-on-year decline in net profit after non-deductions in 2021.
In recent years, the rise in sea freight has caused many cross-border companies to face severe challenges. Not only Zhiou, but also big sellers such as Anker Innovation and Huabao New Energy have disclosed in their financial reports the negative impact of rising logistics costs on profit levels. Influence.
However, according to Maersk , shipping prices will fall back to normal levels in the second half of the year. has proven to be a cooling trend.
The shipping costs have plummeted, and 70% of the customers want to break the contract!
AMZ123 learned that looking at the current shipping index of major routes, due to the reduction in transportation demand, the freight rates of the eight major routes to and from the United States, Europe and Asia have continued to fall by 1% since the beginning of June, to US$7,502.43/40ft.
According to reports, the current freight rates for some containers on the US West Line are less than US$7,000/FEU, and the freight rates on the European Line are also showing a trend of falling below US$10,000.
According to a survey by Xeneta, as the decline in freight rates expands, nearly 70% of shippers have the intention to renegotiate their contracts or even breach the contract.
At this stage, due to the decline in freight demand, some shipping companies have taken the initiative to lower freight rates to strengthen their efforts to attract cargo. Among them, CMA CGM announced in September last year that it would freeze spot container freight rates. Under recent pressure from the government, is preparing to provide its distributor customers with a discount of 500 euros per 40-foot container for consumer goods imported through French ports. This means shipping costs will be reduced by nearly 10%.
In addition to price reductions in the domestic import market, this line also provides price reduction services to French overseas territories. For these markets, CMA CGM has decided to apply for a discount of up to 500 euros ($520) on a 40-foot container carrying imported goods. This amounts to a 10% to 20% discount.
AMZ123 learned that a Shenzhen freight forwarding company’s recent quotation of Mason is as follows:
- Mason’s limited-time ship is as low as 16/KG
- Mason’s regular ship is as low as 15/KG
- Mason’s overtime ship is as low as 15 12/KG
▲Picture comes from AMZ123 seller communication Group
can see that compared with last year’s high shipping costs of more than 30 yuan/KG, the first-leg logistics fee quotes of major logistics companies have shown obvious signs of falling.
The current container shipping market is showing a cooling trend, mainly due to the impact of the demand side. Nowadays, inflation levels in European and American countries continue to rise, which has greatly suppressed consumption, leading to a sharp reduction in foreign trade orders.
Although the traditional peak season in the second half of the year is approaching, industry insiders predict that it will be difficult for peak season freight prices to replicate the surge in the same period last year. This is undoubtedly good news for sellers. As cost pressure eases, sellers' profits may rebound.
Do you think logistics will be a big challenge during the peak season? Welcome to leave a message and share in the comment area~
