In the first half of the year, the US cross-border e-commerce market experienced various challenges. On one hand, there were new regulations from Amazon that made scheduling appointments difficult and warehouse access complicated. On the other hand, UPS was investigating issues related to fraudulent accounts, and there was also a looming risk of strikes. This period has been tumultuous, marked by setbacks and challenges.
US Cross-Border E-commerce
- Amazon’s New Regulations: Difficulty in Appointments and Warehousing
In the past two years, Amazon has been implementing strict measures to regulate the logistics and delivery market. To enhance supervision over third-party logistics carriers and operators, Amazon officially implemented new warehousing rules through its logistics service management platform, Carrier Central, starting from May 1. The new rules can be summarized in three key points: appointment scheduling, matching accuracy, and PO list addition.
Before the implementation of these new rules, many businesses would schedule appointments haphazardly. For instance, if I wanted to deliver a cabinet to Amazon’s popular ONT8 warehouse, all the available appointments within a week might be fully booked, and I would match my appointment with when the cabinet can be unpacked. I’d then add the PO list to the scheduled appointment, which was a more manageable situation.
Another scenario involved directly sending the cabinet to Amazon without adding the PO list, causing confusion about the contents of the shipment. Therefore, Amazon stipulated that sellers and logistics carriers wanting to cancel or modify appointments must do so at least 72 hours before the original appointment time. This means that if your warehouse appointment is three days away, and you haven’t delivered your goods yet, you need to cancel the appointment now. Waiting until the next day won’t work.
This new regulation has caused significant challenges for the trucking industry and overseas warehouses in the United States. Amazon’s new rules have increased appointment matching accuracy and eliminated around one-third of trucking accounts, making overseas warehousing and truck scheduling much more challenging.
These developments this year indicate that Amazon is seeking to enhance its self-built logistics capabilities.
Amazon’s self-built logistics primarily consists of two teams: Amazon Global Logistics (AGL) for the first leg of transportation and Amazon Freight for the last leg. AGL has a warehouse-locking feature, which can lock all FBA shipment plans to a specific Amazon warehouse, preventing the system from splitting the goods to other FBA warehouses. Many larger and oversized items tend to be routed through AGL.
The other team, Amazon Freight, addresses the issues in the last leg. While Amazon Freight helps resolve appointment scheduling difficulties, it still faces challenges with unloading and shelf placement, making it a temporary solution for enterprises.
With the implementation of the new rules, many businesses encountered problems such as canceled appointments and difficulties in delivering goods to warehouses. As one of the leading companies in the FBA logistics field, we provided some insights and suggestions based on their first-hand experience.
After experiencing several chaotic years, Amazon believes that there are too many disorganized third-party logistics service providers. Therefore, it’s optimizing logistics services through policies, aiming for high-quality third-party service providers that meet Amazon’s standards. Hence, logistics companies need to continuously improve their comprehensive problem-solving abilities to survive in the FBA market in the long term. Additionally, while Amazon’s efforts to expand its self-built logistics will impact logistics companies, there’s no need to panic excessively.
Firstly, companies can strengthen their communication with the platform. We established a deep connection with Amazon through the SPN (Service Partner Network) to address the impact of self-built logistics. They also built a nationwide network of delivery capabilities to meet the needs of non-Amazon platforms such as traditional foreign trade or other e-commerce platforms.
Secondly, companies can develop their overseas warehouse service capabilities. They also enhanced trucking solutions, paired mainline resources with last-mile resources, and built emergency systems for dropshipping warehouses, transfer warehouses, and overseas warehouses to create a barrier for overseas warehouse services.
- US End Market: Freight Forwarding Failures and UPS Strikes
While Amazon was reforming the warehousing and logistics market, UPS was also undergoing a major overhaul, cracking down on issues like fraudulent accounts and unauthorized oversizing. In reality, issues related to unauthorized oversizing have always existed, but this year, due to cost pressures, an interesting trend emerged where companies flocked to cheap accounts as if they had discovered a goldmine. It was like the Belgian explosion last year, where all traders found themselves in the warehouses that were facing issues.
This year, the same trend happened with unauthorized oversizing. When a particular account appeared advantageous, everyone started using it. Eventually, it turned out to be an unauthorized oversizing account, leading to a massive seizure of goods by companies. Many goods needed to be repackaged in overseas warehouses, and even the overseas warehouses became wary of receiving goods associated with unauthorized oversizing accounts. This led to a situation where UPS shipments were not being accepted by overseas warehouses. If they were accepted, the warehouses would likely face overstocking issues, necessitating the re-labeling of goods.
With UPS’s in-depth investigation, the number of companies using unauthorized oversizing accounts has reduced, thus alleviating some of the account-related issues. However, UPS faces another challenge—strike risk.
UPS’s work slowdowns are already apparent, with a significant slowdown in terminal extractions. For example, while four truckloads of goods used to be received in a day, now it’s down to three truckloads, and the number is limited. Efficiency in personnel operations has decreased, leading to slower UPS services. The risk has increased as well. On July 5, during the national contract negotiations between UPS and the trucking union, the union rejected UPS’s “unacceptable offer” and announced a strike if an agreement wasn’t reached by August 1. This strike would result in a significant disruption to the flow of millions of packages through the UPS network daily, greatly impacting shipments in the pipeline.
As we know, there’s generally a delay of about 25-30 days from the start to the end of transportation. If UPS shipments start now and there’s a strike in August, there’s a risk of delays caused by the strike.
Therefore, it’s advised that sellers should prefer using local warehouses instead of relying on UPS. While local warehouses might be challenging, they can still be managed, and issues can be resolved. However, if UPS operations are severely disrupted due to a strike, there’s no one who can manage the situation.
In conclusion, the current situation in the US end market is under significant pressure. On one hand, local warehouses are mostly facing overstocking issues. Appointments for deliveries to warehouses are pushed 7-15 days into the future, and many warehouses are fully booked
and unable to accommodate additional appointments, let alone full container direct floor appointments. On the other hand, there are issues with freight forwarding, with prices becoming overly competitive. UPS personnel have slowed down their operations, adding the risk of a strike into the mix.
Market Outlook: Focus on Industry Leaders and Maintain Confidence
After a turbulent first half of the year, how will the second half of the year unfold in the US cross-border e-commerce market? Will there still be a peak season?
It is suggested paying close attention to the policies and direction of Maersk Line in the coming months. As an industry leader, Maersk’s recent introduction of “special rates” policy actually hints at a less optimistic market situation in the second half of the year. Especially during the traditional stockpiling period of July to September, it’s not the sales peak season, and during this time, the market and volume may sink further.
Many shipping companies are reducing services, consolidating routes, and merging in an attempt to counter the decline in freight rates, which introduces instability into the logistics transportation network. Additionally, after facing inflation in the US market last year, there’s now a slight deflation, leading to consumer downgrading and decreased demand. Therefore, the overall market conditions in July, August, and September are likely to be subdued.
In the face of changing market conditions, we have developed a strategy – “Train Hard During the Off-peak Season, Avoid Overstocking During the Peak Season.” During periods of reduced shipment volumes, they focus on internal reorganization, personnel training, optimization of organizational efficiency, enhancement of IT problem-solving capabilities, and improvement of last-mile delivery capabilities to tackle the off-peak season. When the peak season arrives, they leverage the skills honed during the off-peak season to provide more stable and high-quality services to sellers and gain a competitive advantage in the long-term competition.
Certainly, it’s crucial to maintain confidence and a positive outlook. A peak season is expected to occur later in the year, likely during the traditional consumer peak months of November and December. In the long run, as the cross-border logistics industry becomes more standardized and organized, the landscape will favor companies that provide excellent services, and those prepared for the challenges of the market’s changing dynamics. Only with stable shipment volumes, consistent sailings, and a focus on excellent service can logistics companies thrive.
With Amazon’s new warehousing rules and the UPS investigation, the US end market is undergoing restructuring and transformation. Through these challenges and learning experiences, exceptional companies will undoubtedly emerge. The future of the cross-border logistics industry will likely be more standardized and orderly, where maintaining confidence, optimizing operations, closely monitoring market changes, and continuous improvement will be key to achieving long-term success.
For more information, visit Amaxess main page.