Air Freight to Dubai: The Wave of Closures in the Freight Forwarding Industry is Coming
The wave of closures in the freight forwarding industry is coming. Recently, the collapse of a Shenzhen freight forwarder has attracted a lot of attention. In addition, some cross-border logistics companies and supply chain companies have collapsed this year. So it’s obvious that the wave of closures in the freight forwarding industry is on the way. Today, I won’t talk nonsense with you; let’s get straight to the point.
Whether you do air freight to Dubai or other freight forwarding businesses, there are two core points to make profits: first, control costs, and second, increase revenue. If your revenue exceeds costs, you make money; otherwise, you lose money.
Let’s talk about cost control first. Do you think the costs of freight forwarding can really be controlled? The main costs of freight forwarding are nothing more than the airline’s space price, overseas agent service fees, domestic trailer fees, plus labor and office rent. Which of these can you reduce whenever you want? The space price depends on the airline’s mood, the overseas agent’s fees have industry standards, and the trailer fees rise with oil prices. Do you have the right to negotiate a lower price?
Since costs can’t be reduced, we can only see if the revenue from your air freight to Dubai can increase. To increase revenue, you either raise the freight rate or increase the cargo volume. First, let’s look at the freight rate. Can the freight rate of shipping go up? The answer is obvious—it will only get lower and lower. 99.99% of freight forwarding companies are cutting prices to grab orders.
Then look at the cargo volume. It’s not easy at all to increase the cargo volume. There are 3 reasons:
First, there is not much cargo in the air freight to Dubai market. You can see that customers doing cross-border e-commerce and traditional foreign trade are saying that their goods can’t be sold. How can they ship more goods?
Second, even if there is little cargo, competitors are still snatching it. Everyone is eyeing the existing cargo. Originally, they could barely get enough to eat, but now they have to fight for the crumbs. Many freight forwarders have gone from being 70% full to starving now. Once they can’t hold on, they can only withdraw from the market.
Third, there is an invisible killer. It’s not your peers who defeat you, but capital. For example, those cross-border logistics platforms doing air freight to Dubai that expand by burning money. They use capital to cut prices and grab orders, making the freight forwarding market a mess, but you can do nothing about it.
So the freight forwarding companies that will close down next must be these types: First, those who can’t control costs. Second, those who have no sense of service. If the customer’s goods are stuck at customs and not resolved in time, or if it takes a long time to reply to messages when checking the logistics track. Third, those with outdated business models. They only have freight forwarding as one product, and do not add product lines at all, such as the end-to-end drop shipping business.
Some will close down, but some won’t. For example, our company, DL. For the air freight to Dubai route, we use our own transportation fleet for domestic logistics. It takes an average of 6 to 8 hours to pick up goods from the factory warehouse to the airport, which is indeed one of our core strengths. We also don’t need to pay office rent—we bought the entire 8th floor of Building B, Rongde Times Square, Longgang District in full. It’s no exaggeration to say that we are among the top 5% in the freight forwarding industry in terms of strength.
That is to say, we have indeed accumulated some capital over the years. The direct benefit is that we can reduce costs without changing the service quality. Only freight forwarding companies like us will not close down.
That’s all for today. If I talk too much in detail, many freight forwarding bosses won’t be able to sleep. Follow me, and we can communicate together.