5H Inspection Wave Spreads! Some Freight Forwarders Have Already Fled

Recently, the scope of 5H inspections has been expanding continuously. Previously, inspection pressures were primarily concentrated at traditional major ports such as Los Angeles and Long Beach. Now, this trend has rapidly spread to multiple ports across the United States, including Oakland, Savannah, and Seattle. Many industry insiders believe that this round of extensive and high-intensity inspection tightening is akin to the "second wave of 5H inspections."

"Currently, the inspection situation at the Port of Oakland (OAK) is abnormal, and sellers are advised to take this into consideration when shipping goods." Liu Wen, a freight forwarder, told ENNews. At the Port of Oaklan, officials from the FASTDOCREVIEW department have recently been stationed for inspections. They are applying exceptionally strict standards to review trade authenticity, importer qualifications, and cargo value, leading to a sharp increase in the inspection rate at this port.

According to multiple industry insiders, this round of stringent inspections is not an isolated case. Beyond the Port of Oakland, the intensity of 5H inspections has significantly increased at ports such as Savannah, Seattle, and Tacoma, as well as at smaller and medium-sized ports like Baltimore and Jacksonville.

Moreover, even after some cargo has been cleared for release, the system may inexplicably revert to a "5H" inspection status. This means that even if cargo was released initially, it may still face secondary inspections.

"Originally, inspections were only tightened at one or two ports, but now it has almost spread to all ports across the United States. This indicates that U.S. Customs has become aware of the regulatory loopholes that existed previously," said Mr. Zhang. At the beginning of this year, inspections at the ports of Los Angeles and Long Beach became stricter, prompting some freight forwarders to reroute goods to other ports to avoid risks. Essentially, they hoped to bypass high-pressure inspection areas by switching ports. U.S. Customs quickly noticed this anomaly and subsequently expanded the scope of inspections nationwide.

According to multiple industry insiders, compared to some major U.S. ports, smaller and medium-sized ports have less experience in handling complex document reviews and relatively weaker staffing. Once they encounter 5H inspections, which require in-depth document reviews and on-site container examinations, processing efficiency tends to be lower, and cargo is highly susceptible to port delays.

"U.S. Customs indeed faces staffing shortages. Even if it's not a 5H inspection, as long as cargo is flagged, it must wait in line. The actual inspection process doesn’t take long," Mr. Zhang revealed. During inspeIn other words, this wave of 5H inspections has affected a large volume of goods entering the United States, leading to significantly extended logistics transit times.

"There is also a significant risk of a sharp increase in demurrage charges," Mr. Zhang explained further. Small ports inherently face constraints in yard space and turnover capacity. Under sustained high inspection pressure, queuing congestion issues are further exacerbated. As goods pile up, both demurrage and storage charges can escalate rapidly, like a snowball effect, easily leading to situations where the fees far exceed the value of the goods, forcing businesses to abandon shipments to cut losses.ctions, most of the time is spent waiting in line. If a batch of goods is delayed for a month, about 25 days are typically spent in queues, while the actual inspection process can be completed in roughly a week.

As a new wave of 5H inspection sweeps in, the industry widely predicts that this will not be the last. U.S. Customs is expected to continuously tighten inspections of imported goods, with inspection rates set to rise further.

"This move will at least serve as a deterrent. Even if it doesn’t completely block all violations, it can effectively curb some industry malpractices," says Liu Wen. In his view, as U.S. Customs continues to improve its technological capabilities and allocate personnel more efficiently, inspection efforts are expected to become even stricter.

Low-price cargo solicitation is widely regarded as the root cause of many current malpractices in the logistics industry.

Mr. Zhang believes that the ability of some freight forwarders to consistently offer low prices for ordinary goods is based on two practices: first, directly under-declaring the value of goods; second, specializing in handling sensitive cargo to collect high additional fees, then balancing the costs by soliciting large volumes of ordinary goods.

According to reports, the profit from 500 kilograms of sensitive cargo can even exceed that from 5 tons or more of ordinary goods.

"This also explains why, even under the current strict scrutiny, many continue to violate the rules," says a freight forwarder. Many in the industry still insist on dual clearance and duty-paid models or attract customers with extremely low shipping prices through under-declaration, essentially gambling on the odds of being inspected.

At its core, the issue lies in the low cost of violating the rules. To compete for business, many are willing to take risks, as getting caught often only means reapplying under a new identity or rebranding.

Therefore, the industry generally believes that under repeated rounds of strict inspections, malpractices will not truly disappear but will simply shift elsewhere. As soon as one loophole is closed, new gaps will inevitably emerge elsewhere.

Industry insiders have reported incidents of freight forwarders shutting down operations and fleeing. If the current strict inspection regime continues, the sector is likely to face a wave of concentrated business collapses and a surge in such "fleeing" cases. According to informed sources, the recent wave of 5H customs inspections that began earlier this year has already led to some freight forwarders going out of contact or disappearing.

The source noted that amid a generally weak order environment for cross-border e-commerce sellers, many freight forwarders, under pressure to secure cargo, continue to offer low shipping rates. To maintain profits, they have no choice but to persist in undervaluing cargo declarations, thereby creating significant operational risks.

Liu Wen and others believe that the unscrupulous practices of some industry players have led to a situation where "bad money drives out good," trapping the industry in a vicious cycle. As a result, they support stricter oversight. Even if intensified inspections cause short-term pain, they argue, a tougher regulatory approach is necessary to clean up the industry. This would allow compliant, diligent freight forwarders to operate sustainably and carve out a reasonable space for themselves.

"There will be no lesson learned without pain. Only by experiencing a wave of concentrated business failures and eliminating a batch of non-compliant players can the industry temporarily return to rationality. It is through such turbulence that the sector can achieve a spiral of standardized development," they added.

Notably, a consensus has emerged within the industry regarding the current round of strict inspections: freight forwarders should rightfully bear corresponding responsibilities, and clients must also learn from this lesson. They should no longer make price the sole criterion when choosing logistics service providers.

In Mr. Zhang's view, many clients initially placed excessive trust in freight forwarders, entrusting them with full responsibility for customs clearance, transportation, and all other aspects of the logistics chain. Freight forwarders capable of providing end-to-end services, by controlling the core links, enjoyed relatively substantial profit margins. Early adopters of the end-to-end service model in the industry largely reaped the benefits. However, the so-called end-to-end service is not something every freight forwarder can genuinely provide with fully self-operated capabilities; many simply patch together resources from various links.

As the industry has developed, many logistics practitioners have grown increasingly dissatisfied with the existing profit distribution structure.

"Industry profits are typically split 80/20 or 70/30, with the lion's share going to the companies. As a result, many highly capable salespeople have left to start their own businesses in pursuit of higher earnings," Mr. Zhang explained. Some, leveraging the trust they built with previous clients, have engaged in fierce price wars upon going independent, successfully attracting numerous cost-conscious cross-border sellers.

According to industry sources, in 2025, many logistics companies typically declared taxes of $2,500–$3,000 per container. In contrast, numerous small and medium-sized freight forwarders—and even some leading companies—declared taxes as low as $400–$800, far below the reasonable range.

"The pricing itself is significantly low. They rely on extreme price wars to secure large volumes of cargo. Their profits don’t come from reasonable margins but from sheer volume, gambling on the probability of being inspected," the industry explains.

In response to the recent market trend of "return and protection" products gaining popularity, multiple industry insiders have reminded sellers to exercise caution and remain vigilant about the underlying risks.

"From the actual terms, such products can indeed provide a certain degree of protection for sellers. However, if market prices do not increase accordingly, this protection becomes virtually meaningless in the event of a large-scale risk eruption," industry sources reveal. For many unscrupulous freight forwarders, "return and protection" products essentially shift the Delivery Duty Paid (DDP) model to Delivery Duty Unpaid (DDU) in disguise, transferring the risks entirely to the seller, who ultimately bears the consequences.

"Sellers should also take the initiative to understand basic logistics industry knowledge, recognize the hidden risks behind low-cost channels, and actively learn about logistics-related information to better protect their own interests," Mr. Zhang advised.