Recently, several overseas warehouses in the Los Angeles and Long Beach port areas have exploded: 8 overseas warehouses focusing on dropshipping have successively shut down, 5 warehouse owners have gone missing, and 3 have been forcibly taken over, with over ten thousand items from Chinese sellers being sealed and auctioned, and related news continues to flood the cross-border logistics circle.

According to statistics from several industry channels, the value of goods involved in this explosion has reached hundreds of millions, with some sellers suffering losses of over ten million in a single incident, and many small and medium-sized sellers have had their annual profits nearly wiped out by a single accident, even being forced to exit the European and American markets.

On the surface, this incident appears to be an explosion of overseas warehouses, but what it reflects is actually an increasingly clear change in the entire cross-border industry:

In the past, when many sellers chose logistics service providers, the first question they asked was "how much per kilogram"; but in today's market environment, what truly determines the value of a logistics company is more about stability, compliance, and the ability to handle issues when they arise.

This is also why the Los Angeles overseas warehouse "thunderclap" served as a very realistic wake-up call.

In recent years, "thunderclaps" from freight forwarders and overseas warehouses have become high-frequency risks in cross-border logistics. According to public court cases from maritime courts and industry platform statistics, from 2024 to 2025, unreliable freight forwarders and suspected unreliable enterprises have been continuously exposed at multiple ports in China, with hundreds of such entities identified. In cross-border logistics disputes handled in 2025, cargo ownership and fund disputes caused by "thunderclaps" have continuously increased as a proportion.

These "thunderclaps" are the concentrated outbreak resulting from long-term low-price competition, weak risk control, and operational imbalance in the industry.

Many freight forwarders and overseas warehouses that have exploded often attract customers with low prices in the early stages, but later experience a broken capital chain, ultimately leading to warehouse owners going missing and goods being disposed of illegally, causing devastating blows to cross-border sellers:

1. Sellers lose both money and goods, with items being sold privately or auctioned at low prices;

2. The cross-border rights protection cycle is long and costly, making it difficult for small and medium-sized sellers to bear;

3. Secondary losses far exceed the value of the goods, with stockouts, account penalties, and loss of market share;

4. Small and medium-sized sellers have weak risk resistance and become the main victim group, with some being forced to exit the industry.

Many sellers in the past understood logistics as an execution link, thinking it was just "shipping the goods";

but only after experiencing incidents do they truly understand:

Combining industry data and failure cases, the five core reasons for frequent failures of freight forwarders and overseas warehouses are superimposed, ultimately leading to systemic risks.

The rigid costs of overseas warehouses and freight forwarders in Europe and America (rent, labor, customs clearance, last-mile delivery, etc.) are actually relatively transparent and difficult to compress indefinitely.

However, after a large number of speculative entities entered the market, they attracted customers with prices far below the market reasonable price or even below cost. These service providers lack real, healthy profitability and often rely on new sellers' advance payments to fill old holes. Once the cash flow breaks, warehouse owners disappear, and warehouses stop operating, the losses are entirely transferred to the sellers.

The biggest pitfall for sellers here is mistakenly believing:

In fact, reasonably low prices can come from economies of scale, management efficiency, and resource integration capabilities;

• Compliance costs are compressed

• Insufficient service capacity

The capital chain itself is unhealthy.

The logistics industry has no magic.

In recent years, cross-border e-commerce has experienced explosive growth, with many service providers blindly expanding with high leverage, signing long-term high-rent leases, and rapidly stocking warehouses.

However, since 2025, consumption in Europe and the US has slowed down, warehouse vacancy rates have risen in some regions, and order growth has fallen short of expectations. Small and medium-sized service providers operating with high leverage have quickly fallen into the dilemma of "declining revenue + high fixed costs," ultimately becoming insolvent and forced into collapse.

Many sellers only look at whether the warehouse is large or the quote is low, without realizing:

A larger warehouse doesn't necessarily mean safer; faster expansion doesn't necessarily mean more stable.

What truly determines the safety of a service provider is its underlying cash flow capability, risk control capability, and continuous operation capability.

In the past two years, cross-border regulations in Europe and the United States have become noticeably stricter.

US CBP has continuously strengthened inspections at core ports, and high-risk operations such as under-declaration, false waybills, customs clearance using borrowed qualifications, and false re-exports face greater crackdowns; meanwhile, requirements for VAT compliance, product certification, and customs clearance authenticity are also becoming increasingly stringent.

In the past, many people in the cross-border industry believed in "price logic" – whoever is cheaper, use them;

But now the industry is gradually moving towards "safety logic" – whoever is more stable, more compliant, can better guarantee ownership of goods and fulfillment, is more valuable.

Stricter platform supervision, stricter customs requirements, and thinner seller profits mean that there is less room for violations.

Service providers relying on gray modes to maintain low prices are often the first to encounter problems after regulations tighten.

Some operators deviate from their main business of warehousing and logistics, transforming overseas warehouses and freight forwarding businesses into financing tools, misappropriating sellers' advance payments, and using margin deposits for high-risk investments or blind expansion.

In the recent Los Angeles incident, some involved warehouse owners not only absconded with service fees but also privately sold off goods for cash, with sellers ultimately bearing the losses.

Many incidents, while appearing to be "warehouse problems" on the surface, are essentially "money problems" at their core.

Therefore, for sellers, judging whether a logistics service provider is worth cooperating with involves looking not only at routes and quotes but also at whether they possess the most basic:

The entry threshold for the overseas warehouse sector is relatively low, allowing a large number of speculators without qualifications, systems, or risk control capabilities to enter quickly and attract customers with low prices.

At the same time, industry regulation lags behind, and the cost of violations is low, which puts compliant and stable service providers at a disadvantage in pricing, creating a vicious cycle of "bad money driving out good" and increasing the overall probability of industry incidents.

However, in the long run, this situation will not continue indefinitely.

As the market matures, regulations strengthen, and sellers become more rational, the industry will surely move towards a healthier direction:

In cross-border logistics between China and Europe/America, price and safety are not entirely opposed, but they are by no means infinitely achievable together. Reasonable low prices stem from economies of scale or efficiency improvements, usually 5%-10% lower than the market average; however, if the price is as low as 20%, 30%, or even more outrageous, it often implies hidden risks.

Because they are truly calculating the total cost, not just the per-shipment shipping cost.

Logistics costs are just one part of the product cost structure; losses from supply chain accidents are often exponential:

This is also why a new value is gradually emerging in the cross-border logistics industry:

In other words, sellers are beginning to be willing to pay a reasonable premium for more stable, secure, and accountable services.

Because they know that what is truly expensive is always the accident.

Rigid costs in cross-border logistics in Europe and the US are transparent. Service providers can only profit through scale, efficiency, management, and long-term accumulation, not by cutting compliant investments, misappropriating funds, or compressing risk control.

Many small and medium-sized sellers fall into the low-price trap, often because they only see the few dollars saved on shipping in the short term, while ignoring the greater cost behind it.

Currently, European and American regulations are continuously tightening, and platform risk control is also strengthening. The authenticity of logistics, timeliness, and warehousing compliance are becoming increasingly important.

Today's cross-border logistics must achieve the following simultaneously:

• Customs clearance compliance

• Documentation compliance

• Fulfillment stability

• Risk Controllable

In the past, sellers asked: "How much per kilogram?"

In the future, more and more sellers will ask: "If something goes wrong, can you solve it? Can you cover it? Can you ensure my shipment arrives safely?"

1. Novice Sellers: Passive Pitfalls Due to Information Asymmetry

New sellers lack industry experience and prioritize cost as their primary decision-making factor. They are easily swayed by promotions like "lowest price on the entire network," "thousands of orders daily," and "customs clearance included, tax paid," without verifying qualifications or signing standardized contracts.

After encountering a "thunderclap" (major failure), they often have no recourse for rights protection due to a lack of complete evidence chains, resources, and experience. Ultimately, they face the cost of depleted startup capital, store closures, or even exiting the industry.

Some mature sellers, in pursuit of maximum profits, still actively choose high-risk, gray channels, hoping to reduce costs through low declarations, borrowing qualifications, and false transshipment.

But this choice essentially involves trading the certainty of long-term operation for the luck of short-term profits.

Small item sellers have relatively controllable losses, while bulk commodity and full-container sellers face not only the loss of goods but also risks of customs investigation, fines, account association risks, and even the potential loss of resources and channels accumulated over many years.

Therefore, looking to the future, sellers will gradually stratify.

One type is short-term arbitrage sellers, who are extremely price-sensitive and only focus on immediate profits.

Another type is long-term operating sellers, who value stability, compliance, brand, and supply chain security more.

From the perspective of logistics service providers, the latter are truly high-quality customers worth serving long-term.

Combining freight forwarder failure cases, the four most common pitfalls for small and medium-sized sellers need to be carefully avoided:

Excessively focusing on logistics costs, blindly pursuing low prices, ignoring the safety of goods, funds, and accounts, and gambling their entire fortune to save a little money.

Beautifying non-compliant operations such as low declarations and using other companies' customs clearance credentials as "operational techniques", ignoring the trend of tightening regulations, and ultimately being investigated and punished for non-compliance, which is not worth the loss.

Equating "multi-warehouse distribution in the same region" with risk diversification, choosing multiple affiliated or high-risk service providers. Once one fails, everything is lost.

Failure to sign standardized contracts and retain proof of ownership of goods makes it impossible to prove ownership after a collapse, leaving one to passively bear losses.

These misconceptions, while appearing to be operational issues on the surface, are fundamentally cognitive problems.

Facing high-frequency risks of collapse, small and medium-sized sellers need to abandon侥幸 (luck/chance), establish a risk control system, and protect their bottom line from the following four aspects.

1. Avoid extremely low prices and establish a scientific understanding of costs.

Exclude service providers whose quotes are significantly lower than the market average, and choose stable, transparent, and accountable compliant service providers. Understand that "low price ≠ saving money" and calculate the balance between logistics costs and cargo damage risks – saving 10% on logistics might lead to a 100% loss from cargo damage.

2. Adhere to the bottom line of compliance and eliminate gray operations.

Declare the value and name of goods truthfully, do not abuse tax exemptions, do not use fake waybills, do not engage in false transshipment, do not use borrowed titles for customs clearance, and ensure that product certifications are complete. Compliance is a necessary cost of operation, not an additional burden.

Select 2-3 directly operated, established overseas warehouses from different entities and regions with long-term operating capabilities, avoid affiliated warehouses, diversify risk levels, and ensure supply chain stability.

Sign a formal contract with the service provider, clarifying ownership of goods and liability for breach of contract; retain certificates such as purchase contracts, bills of lading, and customs declarations throughout the process to form a complete chain of evidence and take the initiative in rights protection.

At the same time, when selecting partners, sellers should also gradually shift from "looking at quotes" to "looking at capabilities", focusing on evaluating whether a logistics service provider truly possesses the four core capabilities:

Because truly mature logistics companies essentially engage in cross-border supply chain risk management.

The explosion of the Los Angeles overseas warehouse is by no means accidental, but the inevitable result of the combined effects of low-price involution, loss of compliance, and exposed funds, and a concentrated reflection of industry survival of the fittest.

The competition in the current European and American cross-border market has shifted from "competing on low prices" to "competing on stability"; operating models with non-compliant low prices are rapidly losing their space for survival.

For sellers, what truly needs to be guarded is:

For logistics service providers, true future value lies in helping clients safeguard the bottom line of the supply chain and navigate the uncertainties of cross-border business.

Only by abandoning侥幸心理 (wishful thinking), discarding extreme low-price mentality, adhering to compliance bottom lines, establishing comprehensive risk control awareness, and choosing truly stable and accountable partners can cross-border sellers protect their cargo rights and funds, and achieve long-term, stable, and sustainable overseas expansion.

Zhongnan Jinghang International focuses on the entire process of international logistics, including air freight, full container ocean freight, LCL ocean freight, last-mile customs clearance and delivery, and overseas warehouse one-stop fulfillment. Based in North America, it covers the US, Canada, Mexico, UK, and Vietnam, with integrated port, warehousing, and terminal logistics.

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