There are mainly the following reasons for the decline in entrepot trade. Firstly, due to changes in the global trade situation and the rise of trade protectionism, tariffs and trade barriers in various countries are constantly increasing, which has significantly increased the costs and risks of entrepot trade. For example, some countries impose high tariffs on specific products, and it's difficult to avoid them even through entrepot trade. Secondly, transportation costs fluctuate greatly. The instability of international oil prices and the imbalance between supply and demand in the shipping market have led to an increase in transportation fees, squeezing the profit margin of entrepot trade. Moreover, with the increase in supply chain transparency and the strengthening of customs supervision technology and international cooperation, it has become more difficult for enterprises to avoid taxes and trade restrictions through entrepot trade. In addition, with the development of digital trade, direct trade is more convenient and efficient, and some enterprises are more inclined to conduct direct transactions.
Combined, these factors have led to a decrease in the volume of entrepot trade business.
Professional consultant answers
Sarah ZhangYears of service：8Customer Rating：5.0
Document expertConsult
There are mainly the following reasons for the decline in entrepot trade. Firstly, due to changes in the global trade situation and the rise of trade protectionism, tariffs and trade barriers in various countries are constantly increasing, which has significantly increased the costs and risks of entrepot trade. For example, some countries impose high tariffs on specific products, and it's difficult to avoid them even through entrepot trade. Secondly, transportation costs fluctuate greatly. The instability of international oil prices and the imbalance between supply and demand in the shipping market have led to an increase in transportation fees, squeezing the profit margin of entrepot trade. Moreover, with the increase in supply chain transparency and the strengthening of customs supervision technology and international cooperation, it has become more difficult for enterprises to avoid taxes and trade restrictions through entrepot trade. In addition, with the development of digital trade, direct trade is more convenient and efficient, and some enterprises are more inclined to conduct direct transactions.
Combined, these factors have led to a decrease in the volume of entrepot trade business.
Michelle ChenYears of service：3Customer Rating：5.0
Business coordination consultantConsult
It may be due to the instability of logistics. Since the outbreak of the pandemic, problems such as port congestion and flight cancellations have occurred frequently. Entrepot trade involves multiple transshipments, and it's more difficult to guarantee the transportation time and safety of goods. Many enterprises are afraid of delaying delivery, so they give up entrepot trade.
Emily LiuYears of service：10Customer Rating：5.0
Settlement and payment expertConsult
Now the information is too transparent. In the past, entrepot trade could take advantage of the information gap to make a price difference. Now, buyers and sellers can easily find each other, and direct trading is simpler, so the advantages of the intermediate links in entrepot trade are not obvious.
William YangYears of service：5Customer Rating：5.0
International logistics consultantConsult
Entrepot trade requires a large amount of capital for goods procurement, warehousing, etc., and the capital turnover cycle is long. Now, enterprises generally have high capital pressure. In order to relieve the capital burden, they reduce the entrepot trade business.
Joseph ZhouYears of service：10Customer Rating：5.0
Senior foreign trade managerConsult
The rise of manufacturing in some emerging market countries means that competitive products can be produced locally, and they no longer rely on entrepot trade for imports, which has reduced the market demand for entrepot trade.
Andrew HuangYears of service：7Customer Rating：5.0
Supply chain optimization expertConsult
The difficulty of trade financing has increased. Banks are more cautious in assessing the risks of entrepot trade, and loan approval is strict. Enterprises lack capital support, so the scale of entrepot trade is naturally limited.
David LiYears of service：6Customer Rating：5.0
Senior customs declaration consultantConsult
The improvement of environmental protection standards means that the goods involved in entrepot trade may be blocked in transportation, warehousing and other links due to non-compliance with environmental protection requirements. Enterprises are worried about the trouble, so they don't do or do less of it.
Elizabeth LiYears of service：3Customer Rating：5.0
Compliance and risk managerConsult
Exchange rate fluctuations are large. The cycle from signing a contract to receiving payment in entrepot trade is long, and exchange rate changes may lead to exchange losses, which makes many enterprises shy away from entrepot trade.
Robert ChenYears of service：6Customer Rating：5.0
Customer service consultantConsult
With the development of digital technology, online trade platforms have emerged, simplifying the direct trade process. The traditional operation mode of entrepot trade is relatively cumbersome, so it's not as popular as before.