Middle East conflict increases logistics pressure on Vietnamese seafood exporters

Rising geopolitical tensions in the Middle East are driving up shipping costs for Vietnamese food exporters which are heavily reliant on refrigerated transport and long-term contracts.

They also strain food exporters' finances, production plans, and profit margins, said Nguyen Kim Thanh, CEO of Vietnam’s major seafood exporter Saky Foods.

According to Thanh, the impact of geopolitical instability is not limited to maritime transport but extends across the entire food value chain.

Rising oil prices have pushed up international logistics, domestic transport, cold storage, and raw material costs simultaneously.

Recently, many raw material suppliers have announced price increases of about 15-20%. In food processing, raw materials usually make up a large portion of production costs, so any fluctuation quickly affects business efficiency.

The biggest challenge, she highlighted, lies in the speed of market changes. When multiple cost factors rise simultaneously, businesses face multidimensional pressures, while export prices are often fixed in long-term contracts.

“Businesses face simultaneous pressure from raw materials, logistics, and capital costs. However, international selling prices cannot be adjusted immediately, so the additional costs must be absorbed internally,” said Thanh.

The result is a rapid shrinkage of profit margins. Some shipments even generate minimal profit or break even to ensure timely delivery and maintain credibility with international partners - a critical factor in the food export industry.

Beyond rising costs, changes in international shipping routes are also creating significant operational pressures.

Thanh noted that previously, seafood shipments to Europe took about 30-35 days. However, as many shipping lines adjust their routes to avoid risky areas, transit times have extended by 10-14 days.

This change has a cascade of consequences. Companies must prepare materials and organize production earlier to meet delivery schedules. At the same time, cold storage costs increase due to prolonged container refrigeration, while working capital requirements also rise amid high interest rates.

According to the CEO, just extending transport by nearly two weeks significantly increases electricity costs for refrigerated containers and storage costs, especially sensitive for frozen food businesses. Meanwhile, most export contracts remain fixed-price, forcing companies to internally absorb all additional costs.

Many businesses warn that if tensions in the Middle East persist, the greatest risk may extend beyond the region, affecting the global logistics system.

If critical shipping routes are disrupted for a prolonged period, maritime transport costs could rise sharply, similar to the Covid-19 pandemic period. This would affect not only logistics costs but also raw materials, production costs, and other supply chain expenses. Additionally, rising oil prices could increase transportation and input costs across multiple stages of seafood production.

The Middle East remains one of the high-potential growth markets for Vietnamese seafood. According to the Vietnam Association of Seafood Exporters and Producers (VASEP), the region has consistently shown stable growth as a destination for Vietnamese seafood exports.

Customs statistics show that Vietnam’s seafood export turnover to the Middle East increased from approximately $197.7 million in 2020 to over $401.1 million in 2025.

Within this export structure, pangasius is the largest product exported to the region, with turnover reaching nearly $176 million in 2025, up significantly from around $79 million in 2020.

Tuna is another important export item to the Middle East, with turnover of about $94.4 million in 2025, while shrimp exports reached over $54 million.

Other seafood products, including marine fish, squid, octopus, mollusks, and various other types, are gradually expanding their market share in the Middle East. This demonstrates that the region is not only a potential consumer market but also plays an important role in Vietnam’s strategy to diversify seafood export markets.

However, VASEP noted that geopolitical instability in the Middle East is a particular concern for the business community, especially as these fluctuations could spread to global trade and logistics.

VASEP proposes support policies amid rising shipping and fuel costs

According to VASEP, closely monitoring geopolitical developments and international logistics fluctuations is crucial for Vietnamese seafood exporters.

Companies need to actively communicate with import partners and shipping lines to adjust delivery plans when necessary, while considering alternative shipping options to mitigate risks.

Many businesses said the impact on Vietnam’s seafood exports now remains limited and mainly logistics-related. However, if the conflict continues, shipping costs, fuel prices, and global supply chains could fluctuate sharply, affecting exporters’ competitiveness.

In an increasingly volatile global market, proactively monitoring the situation and flexibly adjusting market and logistics strategies will help seafood businesses minimize risks and maintain stable export operations.

VASEP also recommended support measures for businesses in case logistics and fuel costs rise sharply, especially if the conflict persists for a long period of time.