SEA TRANSPORT FREIGHTS ARE INCREASING DUE TO THE RED SEA CONFLICT
The Red Sea conflict caused some shipping companies to issue notices to stop shipping goods, or change schedules. The consequence is an increase in sea transport costs with many additional fees incurred. This is having a significant impact on Vietnam's import and export businesses.
Increased fares lead to a series of increased surcharges
The Vietnam Association of Seafood Exporters and Producers (VASEP) cited information from member businesses saying that a series of large shipping companies such as Yang Ming Line, One, Evergreen Line, HMM, Maersk... have sent notices that increased surcharges due to having to change routes on Asia - Europe routes, avoiding going through the Suez Canal and the Red Sea area.
Specifically, shipping rates to the US, Canada and the West Coast will increase from 1,850 USD/container in December 2023 to 2,873-2,950 USD/container in January 2024. Ships to the East Coast in December 2023 are priced at 2,600 USD/container, increasing to 4,100-4,500 USD/container for January 2024.
The reason is said to be that 80% of goods going to the East Coast of the US, Canada and the EU go through the Suez Canal. More than 170 ships were diverted towards southern Africa on December 20, according to digital freight forwarder Flexport, about 35 ships were delayed in the Red Sea. The rerouting is expected to extend transit times by 10 to 14 days, meaning fuel and crew transportation costs increase significantly. The phenomenon of shortage of empty containers can occur locally.
Import and export need to foresee risks
A representative of a business complained that nearly 20% of goods exported to Europe under FOB price contracts this time were temporarily stopped by partners because of rising freight rates. They also have not announced when they will receive the goods. The fact that goods have not been exported causes businesses to have capital stagnant, affecting operations.
Sharing from a representative of Sadaco Group, the company said that the company has a number of orders that must be transported through the Red Sea area, so it has recently received notices of increased rates from a number of shipping companies. The increase is from 200-500 USD/40-foot container with application period from January 1, 2024. Not to mention, what makes businesses worried is not the price of shipping via this route, but the possibility that other routes will also increase prices due to prolonged congestion. The group's representative expressed that the increase in shipping rates during this period will make it difficult for businesses because orders from wood industry businesses have only just recovered. This causes businesses to face mounting difficulties.
According to Mr. Tran Thanh Hai, Deputy Director of the Import-Export Department (Ministry of Industry and Trade), tensions in the Red Sea can make a container passing through the European region cost an additional 1,000 - 2,000 USD. The most affected products include textiles, footwear, wooden furniture...
Faced with the above situation, the Import-Export Department, Ministry of Industry and Trade has requested industry associations and associations in the logistics field to strengthen monitoring and regularly update the situation so that businesses in the industry can firmly grasp the information to proactively plan production and import and export of goods, avoiding congestion and other adverse impacts.
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