HIGHLIGHTS
- High freight charges and a lack of vacant containers have harmed production, processing, and exporting businesses. This not only negatively affects businesses but also prices of goods in the target market.
- This situation can put manufacturing, processing and exporting enterprises in Vietnam facing the loss of foreign customers.
FULL ARTICLE
Freight rates skyrocketed, exporting businesses were pushed into a difficult position
High freight charges and a lack of vacant containers have harmed production, processing, and exporting businesses. This not only negatively affects businesses but also the prices of goods in the target market.
To export goods in December 2021, many businesses had to order containers 1 to 2 months in advance. Furthermore, there is a situation that shipping lines automatically cancel reservations because other businesses agree to pay higher fees to replace them, putting many businesses in a difficult position.
From October 2021 to now, the price per 40-feet container of shipping lines such as CMC, Yang Ming, OOCL, Wan Hai, Maersk Line, Cosco, ZIM has grown by 2,000 – 5,000 for service routes from Vietnam to the United States, Europe, Australia, and Russia.
The cost of shipping a 40-feet container to the United States has surpassed the $20,000 threshold. The freight charge at certain Russian seaports has risen to $15,000 per 40-foot container. Refrigerated container prices have nearly doubled, reaching $13,000-14,000 per 40-feet container.
Mr. Thai Nhu Hiep, Director of Vinh Hiep coffee production and export firm in Gia Lai, told Tien Phong newspaper that shipping rates had increased 10 times compared to the beginning of the year, beyond the tolerance of businesses, freight per 40-feet container to Europe currently ranges from 8,000-10,000 USD.
Competitive pressure in the world market
This situation can put manufacturing, processing and exporting enterprises in Vietnam facing the loss of foreign customers.
According to Ms. Tran Thuy Que Phuong, Chief of VASEP Office, input cost such as raw materials, energy, water, gasoline, and so on are constantly rising. Along with that is the cost incurred for COVID-19 prevention and control activities at businesses.
As a result, the “galloping” growth in freight rates in recent years has contributed to the high cost of products, diminishing Vietnam’s competitiveness in comparison to other nations such as China, India, and Thailand. Lan, Indonesia, v.v
According to Mr. Dinh Gia Nghia, director of Dong Giao food export firm, if the freight rate does not improve, foreign partners will gradually leave the Vietnamese market and seek opportunities in other countries. possess a lower
The reason comes from…
According to the Import-Export Department (Ministry of Industry and Trade), the reason for the high fluctuations in freight rates is a sharp increase in demand when the world economy is gradually recovering from COVID-19.
According to Mr. Hiep, there is a scarcity of empty containers in the pre-and post-recovery of production. China is now returning empty containers to their country, and many multinational carriers’ ships are stranded at ports throughout the world. Furthermore, COVID-19 in the southern area forced shipping companies to decrease flights and limit voyages to Vietnam, making container supplies increasingly scarce.
Furthermore, Vietnam Logistics Business Association reports that foreign shipping lines convey around 88 percent of the entire volume of commodities imported and exported from Vietnam to overseas destinations. As a result, international carriers make the choice on freight charges. This also means that Vietnamese exporters do not have the right to decide on freight rates and must depend on international shipping lines.
Huyen Tu
FURTHER READING
Transparency of sea freight rates, avoiding “price blowing”
