- Rising logistics costs are hindering exports, putting firms at risk.
- Firms not only have to pay higher freight rates but also to compensate trade partners for late delivery.
- Costs are going up, so fruit prices will be adjusted up at least 5% to 10% accordingly. However, higher prices normally erode competitive advantages, increasing business risks.
Many kinds of expenses are increasing simultaneously
Many businesses shared that they had never faced such difficulties as the current situation. When they have not yet recovered from the pandemic shock, they continue to face new problems due to rising fuel prices and increasing logistics costs. They have no choice but to increase the prices of their products to cover the costs incurred.
Ms. Le Thi My Hanh, General Director of Banana Brother Farm Joint Stock Company, said the cost had increased from three to four million VND (US$131 to US$175 or RM547 to RM730) for each truck to transport bananas from growing areas to border gates or seaports. “Due to high costs, we planned to export 40 containers of bananas to China in February, but so far we have only shipped 12 containers,” she shared.
Furthermore, the increase in freight rates by shipping lines has added at least 30 million VND (RM5479) per container to China and made the company sink deeper into a bad situation since they accepted the impacts of the pandemic.
Ms. Ngo Thi Hong Thu, General Director of Ameii Vietnam Joint Stock Company, admitted that logistics costs are beyond the company’s ability, causing them to refuse a number of long-distance orders from foreign partners. This may end up leading to the congestion of agricultural products and lower prices.
“Companies are struggling to cover escalating logistics costs. With this situation, farmers’ products will be priced down,” said Ms Thu.
Ms. Ngo Tuong Vy, Deputy Director of Chanh Thu Fruit Import-Export Co., Ltd. said: “As prices are climbing, fruit ones will be adjusted to increase by at least 5% to 10% accordingly. However, higher prices often erode competitive advantage, increasing business risk.”
Higher rates do not mean better services
Mr. Nguyen Hoai Nam, Deputy General Secretary of the Vietnam Association of Seafood Exporters and Producers, admitted that logistics costs are between US$5,000 and US$10,000 (RM20,954 to RM41,911) higher than those in 2020 for each export container to Europe or America.
However, some shipping lines regularly delay shipments from 10 to 30 days without any reasons, further worsening the situation. “Companies not only have to pay higher freight rates, but also have to compensate trading partners for late deliveries,” he shared.
Mr. Van Nhat Tung, Marketing Director of CMA-CGM Vietnam Joint Stock Company, said that freight rates to Europe had recently skyrocketed to about 16,000 USD/container to Europe, from 5,000 USD (20,954 RM) in 2021.