In the past two days, everyone is most concerned about the situation in Russia and Ukraine, and it is even more difficult for cross-border e-commerce sellers to make exceptions. Because of the long business chain, every move on the European continent may have a significant impact on the business income of sellers. So what impact will it bring to cross-border e-commerce?
Cross-border e-commerce trade between Russia and Ukraine may be directly interrupted
From the perspective of cross-border e-commerce, with the intensified market competition in Europe, America and Southeast Asia, Eastern Europe has become one of the “new continents” for many Chinese sellers to pioneer, and Russia and Ukraine are among the potential stocks:
Russia is one of the top 5 fastest growing e-commerce markets in the world. After the outbreak of the epidemic in 2020, the scale of Russian e-commerce has soared by 44% to $33 billion.
According to STATISTA data, the scale of e-commerce in Russia will reach $42.5 billion in 2021. The average spending of buyers on cross-border shopping is 2 times that of 2020 and 3 times that of 2019, of which orders from Chinese sellers account for 93%.
Ukraine is a country with a low share of e-commerce, but with rapid growth.
After the outbreak, Ukraine’s e-commerce penetration rate reached 8%, an increase of 36% year-on-year before the epidemic, ranking first in the growth rate of Eastern European countries; from January 2019 to August 2021, the number of e-commerce sellers in Ukraine increased by 14%, on average Revenue rose 1.5 times, and overall profit rose 69%.
But all of the above, with the outbreak of the war, the cross-border e-commerce trade between China-Russia, China-Ukraine, and Russia-Ukraine will be interrupted at any time, especially the export business of Chinese sellers, facing the possibility of emergency interruption.
Sellers who do cross-border e-commerce in Russia and Ukraine should pay special attention to the safety of goods in transit and in the local area, and make short-term, medium- and long-term contingency plans, and beware of capital chain breaks caused by sudden crises.
Cross-border logistics suspension and port jumping
Freight rates will rise, congestion will increase
Ukraine has been Asia’s gateway to Europe for many years. After the outbreak of the war, traffic control, vehicle verification, and logistics suspension in the war zone will cut off this major transportation artery in Eastern Europe.
According to foreign media reports, more than 700 bulk carriers around the world go to ports in Russia and Ukraine to deliver goods every month. The outbreak of the Russian-Ukrainian war will disrupt the trade in the Black Sea region, and shipping companies will also bear high risks and high freight costs.
Air transportation has also been greatly affected. Whether it is civil aviation or cargo, many European airlines such as the Netherlands, France, and Germany have announced the suspension of flights to Ukraine.
Some express companies, including UPS in the United States, have also adjusted their own transportation routes to avoid their own distribution efficiency being affected by the war.
At the same time, the prices of commodities such as crude oil and natural gas have been rising all the way. Regardless of shipping or air freight, it is estimated that the freight rate will rise again in a short period of time.
In addition, commodity traders who see business opportunities change their routes and divert LNG originally destined for Asia to Europe, which may exacerbate congestion in European ports, and the launch date of cross-border e-commerce sellers’ products may be extended again.
However, the only reassurance for sellers is that the impact of the China Railway Express is not expected to be too great.
Ukraine is only a branch line on the China-Europe train line, and the main line is basically not affected by the war zone: China-Europe trains enter Europe with many routes. Currently, there are two main routes: a northern European route and a southern European route. Ukraine is only one of the branch lines of the northern European route. nation.
And Ukraine’s “online” time is still short, Ukrainian railways are currently operating normally, and Russian railways are operating normally. The impact on the train transportation of Chinese sellers is limited.
Rising inflation, volatile exchange rates
Sellers’ profits will shrink further
Earlier, the global economy was already struggling under the pressure of rising inflationary pressures and tightening monetary policy. JPMorgan forecasts that the annualized global GDP growth rate fell to just 0.9% in the first half of this year, while inflation more than doubled to 7.2%.
Foreign trade settlement and exchange rate fluctuations will also bring additional risks. Yesterday, as soon as the news of Russia’s attack on Ukraine was announced, the exchange rates of major Euean currencies immediately plunged:
The euro exchange rate has fallen to its lowest level in more than four years, with a minimum of 7.0469.
The pound also fell directly from 8.55 to around 8.43.
The Russian ruble broke 7 directly from around 0.77, and then returned to around 0.72.
For cross-border sellers, the continuous strengthening of the exchange rate of RMB against the US dollar will directly affect the final profits of sellers after foreign exchange settlement, and the profits of sellers will further shrink.
On February 23, the exchange rate of the onshore RMB against the US dollar exceeded 6.32 yuan, and the highest reported was 6.3130 yuan;
On the morning of February 24, the RMB against the U.S. dollar rose above 6.32 and 6.31, and rose to 6.3095 during the session, approaching 6.3, a new high since April 2018. It fell back in the afternoon and closed at 6.3234 at 16:30;
On February 24, the central parity rate of RMB in the inter-bank foreign exchange market was 1 US dollar to RMB 6.3280 and 1 euro to RMB 7.1514;
This morning, the onshore RMB exchange rate against the U.S. dollar rose again above 6.32 yuan, and as of 11:00 a.m., the lowest reported at 6.3169.
“The foreign exchange loss was serious. Even though the sales of orders were good in the past few months, the gross profit commission was even lower.”
According to industry analysts, the exchange rate market is still highly uncertain this year. Looking at the whole year of 2022, as the U.S. dollar turns its head downward and the fundamentals of China’s economy are relatively strong, it is expected that the RMB exchange rate will appreciate to 6.1 in the second half of the year.
The international situation is turbulent, and the cross-border road for sellers is still long and difficult…
Post time: Feb-26-2022