2020 was a crucial year for small importers. Even before this year, 97% of US importers are small businesses, bringing in about 50 billion dollars in imports.
Of course, COVID-19 has accelerated this trend, as more consumers work from home and order online, while it’s also becoming easier for sellers to get on Alibaba, import, and then sell on Shopify or Amazon.com. So, it is not surprising, The third quarter saw a massive rise in small business It is being formed in the United States.
However, shifts in demand, fulfillment capabilities, and supply challenges have converged to create additional challenges for small businesses. It didn’t stop them though. Small businesses have been incredibly resilient in this challenging year.
Adaptation of small and medium businesses
Among more than 10,000 small businesses in Freightos.com, the world’s largest digital shipping marketplace, many of which are small e-commerce businesses that use Freightos.com to ship directly to Amazon FBA warehouses and other fulfillment solutions.
Despite challenges during the year, shipments by these companies to FBA warehouses (the main e-commerce channel throughout the pandemic) were above On an annual basis from May to July at an average of 15%, which shows resilience as consumption shifts from services to goods. It wasn’t all rosy though. FBA imports fell in July and August, likely in response to new restrictions Amazon has limited the amount of inventory third-party sellers can hold in its warehouses.
In other words, while demand and supply have been able to keep pace, last mile distribution has become a major bottleneck for SMEs.
And since Freightos.com’s overall market shipments remained strong in August and September, it’s possible that SMBs selling on Amazon have started using other fulfillment solutions or digital sales channels in one of the many hubs that SMBs have had to make this year.
Similarly, when Amazon introduced March policy Which allowed only essential goods to be met through its warehouses, FBA shipments dropped on Freightos.com, but got back a week later before Amazon announced an end to the policy, which could indicate that small and medium businesses were able to quickly switch to selling essential goods.
So, along with adjusting to the timing of shipments, supply trends early in 2020 have shown sellers are able to quickly switch to sourcing COVID-related goods — healthcare-related imports jumping from 7% of all shipments in February to 14% in April. .
But import is still an uphill battle.
Besides fulfillment and supply bottlenecks, highly volatile freight rates have made planning a huge challenge for importers as well. Due to a combination of limited supply and increased demand combined to drive prices almost uninterrupted from June through September, ocean prices from China to the West Coast of the United States doubled from the end of May to August, and increased by 138% (compared to the end of May). ) by September, triple the September rates of last year.
With passenger planes and belly-cargo capacity lost, air freight rates have reached record levels as well. Air freight rates from China to the US rose more than 300% from March to May before declining but remained very high compared to normal levels through most of the summer and into the fall.
Therefore, while importers were, for the most part, able to switch to new goods and continue importing into delivery channels, extremely thin margins were at risk of further erosion.
With a typical spread of 30% in freight rates, transparency in global logistics costs is critical, perhaps especially for small businesses.
This is why Freightos.com has started leveraging its data to provide insight to small e-commerce sellers. The FBA Index (FBAX) , currently in beta, analyzes prices in real time Data on China to US FBA Warehouse Shipping costs to provide FBA importers with more clarity on what to expect from the market.
FBAX is the only door-to-door shipping indicator for shipping to Amazon FBA warehouses, based on actual prices from popular export cities in Southeast Asia to most popular Amazon FBA warehouses.
How does this help importers?
Well, this indicator will help e-commerce sellers who import products from Southeast Asia to easily see shipping cost trends to Amazon FBA warehouses in the USA, decide whether to ship by air or ocean, and provide guidance on shipping timing.
By accessing FBAX, FBA importers will have a benchmark provided for different shipping modes which will help them estimate shipping costs, compare and choose between modes and decide if now is the right time to ship by comparing historical prices.
Now for details
So how does FBAX actually work?
Updated once a week, the index is based on price analysis of thousands of data points from several logistics providers that quote directly on the Freightos.com marketplace for both container and bulk shipments to Amazon warehouses. This includes all costs, But For an FBA handling fee.
FBAX aggregates real-time pricing data provided by logistics providers on the Freightos.com marketplace for door-to-door air shipments, less container load (LCL) and full container load (FCL) shipments from four major cities in China to eight Amazon warehouses. FBA across the US most selected by Freightos.com customers (32 lanes total).
The index rate for each position is calculated as the average of the average rates offered for each combination of origin and destination for which there are rates from more than one provider.
Prices are shown for each mode as follows:
- Air: $ / 250 kg
- LCL: dollars/cubic meter
- FCL: $/FEU
Select the cities of origin of China’s major large export areas:
The destination Amazon FBA warehouses have been selected based on those with the largest volume of orders in the Freightos.com marketplace and include:
- Charlotte, Nick
- Dallas, Texas
- Joliet, Illinois
- Phoenix, Arizona
- Los Angeles, California
- Moreno Valley, California
- San Bernardino, California
- Stockton, California
It’s also worth noting that costs are generally higher for US Midwest and East Coast destinations than for West Coast destinations, and therefore may be consistently higher than the benchmark price by comparison.