Lower shipping costs a golden market expansion chance for Vietnam exporters

This month’s fall in shipping rates should be seen as a golden opportunity for Vietnamese businesses to boost exports and expand markets for better growth in the last months of the year, says the Vietnam Maritime Administration (VMA).

It says in a report that compared to just one month ago, shipping rates have fallen by as much as 20-30% on routes from Asia to the U.S and Europe. This has created favorable conditions for exporters to expand their business by tapping new markets.

Compared to the peak price period in September 2021, when the global supply chain was severely disrupted by the Covid-19 pandemic, shipping rates have plunged by up to 44%.

The average weekly fall of 3-4% reflects a stable downward trend in the coming time, the VMA says.

It expects shipping rates to continue falling in the coming months, particularly after the ongoing congestion at major ports around the world is completely resolved.

Nguyen Thai, an import-export specialist with a logistics company in Ho Chi Minh City, confirmed that shipping rates had started to decrease in August, with the reduction rate depending on the route.

"This is understandable. Particularly for the route from China to other countries, the goods volume has plummeted compared to the period before August, leading to a decline in shipping rates.

"This comes from the U.S. imposing strong tariffs on many types of Chinese goods including electric vehicles, battery components and solar panels starting this month. The move forced Chinese exporters to boost exports ahead of schedule," Thai said.

He noted that at that time, many Chinese exporters paid higher prices to shipping lines to secure slots on ships bound for the U.S. and Europe. They were willing to pay up to $1,000 for a slot on a ship, while Vietnam only paid $600. Therefore, almost all shipping lines gave priority to China, cutting trips to other countries including Vietnam, leading to rate hikes.

"Now all goods from China have been shipped and shipping rates have decreased. Another thing to note is that the wave of moving factories from China to other countries such as Vietnam, India and Malaysia has also shifted the center of the supply chain, cutting export shipments from China," Thai explained.

Data from Phaata, a Vietnamese international logistics exchange, shows that freight rates from Asia to North America have dropped 1.52% from early August and 19.52% from July to $6,356 per 40-foot container.

Meanwhile, other experts have noted that while shipping rates have cooled down, they are still high compared to pre-pandemic levels.