Volatile Middle East Situation: Must-Read Guide for Foreign Trade Used Car Practitioners - Avoid Pitfalls, Practical Strategies to Protect Profits
Recently, colleagues in the foreign trade used car industry have probably been troubled by the volatile situation in the Middle East - the ongoing fluctuations in Iran and its surrounding areas have disrupted the originally smooth business processes, leading to logistics bottlenecks, soaring costs, and difficulties in foreign exchange settlement. Many colleagues complain that "we have received many orders, but all profits have been consumed."
As a veteran who has been deeply engaged in the foreign trade used car industry for many years, combining recent frontline practical experience, I have sorted out a set of directly implementable response strategies and a few sincere pieces of advice. Whether you focus on the Middle East route or also cover African markets such as Rwanda, these strategies and advice can help you avoid risks, stabilize cash flow, and protect profits during the volatile period.
I. Core Practical Strategies: Keep Risks Away from Orders
For foreign trade used cars, cash flow is the lifeline, logistics is the key, and foreign exchange settlement is the guarantee. During the volatile period, every step must be cautious. The following 3 core strategies have been tested in practice and are recommended to be directly adopted.
(1) Tighten Payment Terms, Never Loosen Cash Flow
In the past two years, due to the volatile situation, many colleagues have suffered losses from "payment collection" - the goods have been shipped, but the balance payment has been delayed for a long time, and some even lost contact completely, resulting in total loss of investment. Only after suffering losses did we realize that payment terms must be strictly enforced with no room for negotiation.
Prioritize the "30-70 payment" model: After 30% deposit is received, arrange vehicle preparation and customs declaration. The remaining 70% balance must be received before arranging shipment. Resolutely avoid the risky operation of "shipping first and collecting payment later." Don't worry about buyers refusing to accept it. In an uncertain situation, reasonable payment terms not only protect ourselves but also make buyers clear about their responsibilities, which can instead increase trust.
In addition, contract terms must be detailed and clear. In particular, it is necessary to clearly indicate the liability for "payment delays or obstacles in contract performance caused by sanctions or force majeure" to avoid disputes and wrangling later. All communication records with buyers, whether emails, WeChat messages or phone recordings, should be completely retained. These are key evidences for subsequent rights protection, so don't be lazy.
(2) Optimize Logistics + Dynamic Quotation, Avoid Cost Traps
Logistics is the "lifeline" of foreign trade used cars. Under the current Middle East situation, sea freight is like a roller coaster, and transit hubs also hide risks. A little carelessness will increase additional costs or even delay delivery.
First of all, must reserve a space for freight hedging when quoting. At present, geopolitical conflicts have led to sharp fluctuations in sea freight and additional war risk surcharges, which can reach up to 150,000 US dollars per ship. If this part of the cost is not reserved in advance, it will eventually be borne by ourselves. It is recommended to reserve an additional 15%-35% based on the actual freight when quoting to avoid losses caused by rising freight later.
Secondly, avoid sensitive transit hubs. Previously, many colleagues were used to transiting through Jebel Ali Port in Dubai, but the safety of this port is greatly affected by the current situation, and cases of cargo detention and delay occur frequently. We have recently adjusted our logistics routes: either evaluate detouring the Cape of Good Hope, or choose ports in Oman that are not restricted by the Strait of Hormuz, such as Salalah Port, as alternatives. Although detouring will increase the voyage, it can maximize the safety of goods.
Finally, communicate the delivery cycle with buyers in advance. Detouring the Cape of Good Hope usually increases the voyage by 10-15 days compared with the original route. Especially for colleagues engaged in African markets such as Rwanda, it is necessary to explain the situation to buyers in advance, extend the delivery expectation, and avoid disputes caused by delayed delivery that affect subsequent cooperation. It is also a reminder here that there have been tentative resumptions of navigation on the Red Sea route recently, but geopolitical risks have not been completely eliminated. It is recommended to focus on stable routes for the time being and not blindly follow the resumption of navigation.
(3) Use Compliant Financial Channels, Make Foreign Exchange Settlement Easier
Another major problem brought by the volatile situation is the risk of foreign exchange settlement - US dollar settlement is easily affected by sanctions, and exchange rate fluctuations will also erode profits. Many colleagues obviously made money, but finally, their actual income was greatly reduced due to foreign exchange settlement issues.
It is recommended to prioritize RMB settlement, which can not only avoid the risk of US dollar sanctions but also reduce losses caused by exchange rate fluctuations. Now many African and Middle Eastern buyers are also willing to accept RMB settlement, and communication is not difficult.
If it involves direct business with sensitive regions such as Iran, must use compliant channels for foreign exchange collection, such as Kunlun Bank. Such banks have the ability to handle business in sensitive regions and can maximize the safety of foreign exchange collection. In addition, when settling foreign exchange, must follow the principle of "consistency between documents, consistency between documents, and consistency between documents and goods", and prepare all kinds of documents in advance to avoid affecting the progress of foreign exchange settlement due to document issues.
II. 4 Sincere Pieces of Advice for Foreign Trade Used Car Practitioners
To achieve long-term success in the foreign trade used car industry, we must adapt to the situation. During the volatile period, instead of being anxious and internalizing conflicts, it is better to take the initiative to adjust. These 4 pieces of advice are hoped to help you avoid detours.
1. Don't Put All Your Eggs in One Basket; Market Diversification is the Key
The Middle East situation is difficult to stabilize completely in the short term. Over-reliance on the Middle East market will only put yourself in a passive position. We have currently increased investment in AU markets (such as Rwanda and Tanzania), ASEAN and Central Asian markets. These markets are less directly affected by the Middle East conflict and have strong demand - especially the African market, which has a large gap in demand for used cars. Chinese used cars have obvious cost-performance advantages and great potential in the future. By laying out multiple markets, even if one market is affected, it can be compensated by other markets to maintain the basic business volume.
2. Never Cross the Compliance Bottom Line; Otherwise, the Losses Outweigh the Gains
In foreign trade, compliance is always the top priority. Especially in the current situation, the sanctions list of the US Department of the Treasury's Office of Foreign Assets Control (OFAC) is updated frequently. Since 2025, hundreds of entities and ships have been included in the sanctions list, and there are many hidden risks in "shadow fleets."
Must develop the habit of checking the sanctions list regularly, and resolutely not cooperate with shipowners or agents included in the sanctions list, even if the profit is high. In addition, it should be noted that even if both parties to the transaction are not US entities, as long as it involves US dollar settlement or the use of US-related technologies, it may trigger sanctions risks. This must be vigilant to avoid losing more for less.
3. Strengthen After-Sales Service and Establish Differentiated Advantages
When the situation is unstable, the supply of new cars will be affected. Markets like Rwanda will become more dependent on used cars, which is a good opportunity for us to establish advantages. The era of simply selling cars is over; now it's about competing with services.
We have now started to provide stable spare parts supply and technical support for overseas buyers, such as pre-stocking common spare parts in Rwanda and arranging professional and technical personnel to provide remote guidance to solve buyers' worries. Although this will increase some costs, it can greatly improve customer stickiness, establish a higher competitive barrier than peers, and make subsequent orders more stable.
4. Keep Up with Energy Trends and Layout New Energy Used Cars
Now high oil prices have become the norm, which has also promoted the shift in consumer preferences in regions such as Africa - more and more buyers are beginning to favor new energy used cars, which not only have low usage costs but also adapt to local travel needs.
If your business is mainly concentrated in African markets such as Rwanda, it is recommended to gradually increase the proportion of new energy used cars, lay out in advance, and seize market opportunities. This can not only cope with the impact of rising oil prices but also make you stand out among peers and seize the next growth point.
Final Words
The foreign trade used car industry has never been smooth sailing; geopolitics and market fluctuations are the norm. Although the current Middle East situation has brought many challenges, it also hides opportunities - as long as we adhere to the risk bottom line, optimize operating strategies, and diversify market layout, we can stabilize profits during the volatile period and even achieve breakthroughs.
If you are also a foreign trade used car practitioner, troubled by issues such as logistics, foreign exchange settlement, and market layout, welcome to leave a message in the comment area to communicate, share experience with each other, support each other, get through this difficult period together, and achieve win-win results in the future!
Company Name: Jingsun Car Co., Ltd
Website: https://www.sin-auto.com/?url=jingsuncar.com
Service Countries: Ghana / Algeria / Cambodia / Middle East / East Africa (Years of practical experience, familiar with customs clearance rules of various countries)