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The impact of another Fed rate hike on international freight forwarders

In the early morning of September 22, Beijing time, the Federal Reserve announced to raise interest rates by 75 basis points, raising the target range of the federal funds rate to between 3.00% and 3.25%. This is the Fed's fifth rate hike this year and its third consecutive rate hike of 75 basis points, the highest rate hike intensity since 1981.


The impact of another Fed rate hike on international freight forwarders


With this rate hike finalized, the U.S. federal funds rate also topped 3 percent for the first time since January 2008—the end of the post-financial-crisis era of low interest rates. The Fed's dot plot released at the same time also sent a hawkish signal. Market interpretations believe that the Fed may raise interest rates by 125 basis points this year, and will not cut interest rates until 2024.


At present, the central banks of various developed economies have been raising interest rates in a trend of "you catch up with me". On the evening of the 22nd, Beijing time, the Bank of England announced to raise interest rates by 50 basis points to 2.25%. On the same day, the Swiss National Bank announced an interest rate hike of 75 basis points.


What impact will the Fed rate hike have on international freight forwarders? The first thing that may be affected is the tax rate for international freight forwarding services.


International freight forwarding is a business auxiliary service, which has been changed and added. The VAT rate is 6% for general taxpayers, 3% for small-scale taxpayers, and 1% during the epidemic.


International freight forwarding agency service refers to accepting the entrustment of the consignee, consignor, ship owner, ship charterer or ship operator, and handling cargo transportation, loading and unloading, warehousing and shipping for the client in the name of the client. Business activities related to entering and leaving ports, pilotage, berthing and other related procedures.


The main advantage of international freight forwarders is that they can transport the goods according to the requirements of each customer. If the customer's main concern is the cost, timetable or safety of the goods and they use the services of a freight forwarder. They can have more ocean, air or express shipping options and choose the best shipping method. Regarding cost, freight forwarders can offer lower prices and larger quantities. So, if you are shipping bulky goods by air, I recommend you to use a freight forwarder.


On the other hand, international freight forwarders can provide more flexible services and can respond quickly in emergency situations.

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