(Yicai) Sept. 10 -- Many Chinese forwarding agents are going out of business or are struggling to break even as orders dry up amid sluggish demand both at home and abroad and intense rivalry, Yicai learned from a series of interviews.

A lot of these firms entered the market between 2020 and 2023 when shipping fees to Europe and the US surged, Ke Jiao, the person in charge of freight forwarder Keshida, told Yicai. They are usually small, inexperienced and not well connected. Now that the export situation is changing, many of them are not getting any orders and have no choice but to shut down. 

Competition is extremely stiff with freight rates constantly tumbling. Guangzhou-based Keshida only broke even in the first half, Ke added.

"Our owner decided to shutter due to poor business and a broken capital chain," Encheng, a small freight forwarder that is also headquartered in Guangzhou, said last month.

Some 44,600 forwarding agencies de-registered their businesses last year, a jump of 10.4 percent from the year before, according to data from company information provider Qichacha.

Revenue halved at just over a quarter of small and medium-sized freight forwarders in the first quarter from a year earlier, according to market research firm Yuguo.

The whole industry is undergoing a reshuffle and this operating crisis is expected to last at least until the first half of next year, said Zhong Zhechao, founder and chief executive at One Shipping.

"Aien Dipu finally turned a profit last month after operating at a loss for several months," a person surnamed Zhao, who is head of the Shanghai-based logistics firm, told Yicai.

"It is very hard to do business in the sea freight sector this year," the boss of another freight forwarder in southern China told Yicai. "Forwarding agents are always on edge, worried whether there will be orders or not. If a problem occurs to a single cargo shipment over the long sea journey, the freight forwarder could be stuck in difficulties for a long time.”

The pressure is not just due to a market downturn, Zhao said. Big changes to overseas trading models have also impacted forwarding agents' operations.

The budding cross-border e-commerce logistics industry is also being affected.

"Cross-border e-commerce platforms are getting more orders from overseas but their orders are small in scale and scattered,” Zhao said. “This makes it more expensive for freight forwarders to expand their market.”

Editors: Tang Shihua, Kim Taylor