HIGHLIGHTS
- From mid-October 2020, sea freight rates began to increase sharply, making import-export enterprises dizzy, especially transport routes to Europe and America.
- It is difficult for state management agencies to control the freight rates of shipping lines because prices operate according to market rules.
- Facing this situation, Mr. Le Duy Hiep – Chairman of the Association of Logistics Service Enterprises said, we need to fully study the application of the Competition Law to the exclusive business case of foreign ship owners in the Vietnamese market.
FULL ARTICLE
The right to decide on freight rates and pricing policies belongs to the overseas parent company
According to the Association of Logistics Service Enterprises, there are about 38 foreign container shipping lines operating in import and export goods, handling 95% of import and export goods by sea in Vietnam. From mid-October 2020, sea freight rates began to increase sharply, making import-export enterprises dizzy, especially transport routes to Europe and America.
Before October 2020, the freight rate from Vietnam to Europe (UK) is about 1,500 USD/20 feet container and from Vietnam to Los Angeles (USA) between 700 and 1,000 USD/20 feet container. But by December 2020, the freight rate from Vietnam to the UK and Los Angeles, respectively 5,400 USD / 20 feet container and 5,000 USD / 20 feet container. The peak of freight rates from Vietnam to the US East Coast is up to 14,000 USD/40 feet container.
Economic experts said that because Vietnam has no international logistics enterprises reaching Europe and America, 80-90% of Vietnam’s import and export goods are still following the custom of buying CIF and selling FOB. For the route to the Americas, the booking rate in Vietnam only accounts for about 10% and most of it is done through forwarding and logistics companies (LSPs).
Therefore, contracting for transport and paying freight rates is usually undertaken by the foreign partner (buyer or seller). The right to charter ships and pay freight rates belongs to foreign partners, so it is very difficult for Vietnamese goods owners to interfere in the international transport chain. It is difficult for state management agencies to control the freight rates of shipping lines because prices operate according to market rules.
Need transparency of fees
Facing this situation, Mr. Le Duy Hiep – Chairman of the Association of Logistics Service Enterprises said, we need to fully study the application of the Competition Law to the exclusive business case of foreign ship owners in the Vietnamese market.
Sharing the same opinion with the representative of the Logistics Service Business Association, economic experts also said that we still have not been able to control the listing of prices and surcharges. Meanwhile, the listed freight rates do not reflect the actual freight rates, because shipping lines have different tariff policies for customers and the actual freight rates, which are not publicly listed, are often lower than the listed prices.
In addition, the listed surcharges only show the price, with the start time and usually the end time after a new announcement, no listing start time, history of changes, the reason for collection, and time and listing changes. Rates are decided by shipping lines and collected from customers without having to register and declare with the competent authority. Therefore, it is necessary to issue a higher management mechanism than the price listing mechanism, which is the price declaration mechanism.
Regarding this issue, Deputy Director of the Import-Export Department (Ministry of Industry and Trade) – Mr. Tran Thanh Hai said that Vietnam is a potential market for shipping lines, therefore, it is not acceptable for shipping lines to come to business but not cooperate with domestic enterprises for common development.
Due to the impact of the complicated Covid-19 epidemic, in order to publicly and transparently transport freight rates, it is necessary that the Vietnam Maritime Administration request shipping lines to strictly comply with regulations and make commitments on ship schedules, seats on ships and ensure enough empty containers to transport goods.
Minh Ngo
FURTHER READING:
Lack of freight transparency, what shipping lines explained?
