Vietnam exporters struggle with rising shipping rates
High sea freight rates are causing a headache for exporters in Vietnam as they have to recalculate costs and even accept losses to keep customers.
Data from Phaata, an international logistics exchange, showed that freight rates from Ho Chi Minh City to the U.S. are increasing sharply. Meanwhile, Drewry's world container index (WCI) increased 12% to $4,716 per 40-foot container in the week from May 30 to June 6, marking a surge of 181% over the same period last year.
Rates have increased 17% to $6,664 per 40-foot container from Shanghai to Genoa and to $7,214 from Shanghai to New York.
The rerouting of ships from the Red Sea via the Cape of Good Hope has caused capacity shortages, increased congestion at ports, and soaring demand. This is also the reason driving the sudden increase in spot rates on main routes. In addition, there is an imbalance between containers serving exports and imports.
Industry experts have said that the U.S plans to impose strong tariffs on many types of Chinese goods such as electric vehicles, battery components and solar cells from August, prompting Chinese exporters to ship their goods ahead of schedule.
Many Chinese exporters are paying higher rates to shipping lines to earn slots on ships going to the U.S. and Europe. They are willing to pay up to $1,000 for one, while exporters in Vietnam only pay $600. Therefore, shipping lines have given priority to China and reduced trips for other countries, including Vietnam, leading to the current huge rate hikes.
Businesses in difficulties
Normally, it takes about 40 days to ship goods from Vietnam to Europe and America through the Suez Canal. Currently, due to tensions in the area, the shipping time has increased to 60 days for one way, pushing up costs by an estimated $1,000-3,000 for each container, said an import-export specialist for a logistics company in HCMC, who declined to be named, .
According to him, prolonged delivery times will cause many import-export businesses to suffer losses, affecting the shipping of goods to other regions in the world such as Asia and Africa.
Vietnam's main exports to the E.U. and U.S., such as textiles, footwear, wooden furniture, and electronics, will be most affected. However, many businesses in Vietnam are delivering goods in the form of free on board (FOB) so the impact is not so great.
"The logistics industry is seeing a slight impact, but others are facing the risk of order disruption if the situation is not resolved,” he noted.
Sharing the same opinion, Nguyen Hoai Nam, deputy secretary general of the Vietnam Association of Seafood Exporters and Producers (VASEP), said that rising shipping rates are causing difficulties for the seafood industry as most businesses mainly operate in export activities, using more than 1 million containers each year. However, currently, it is very difficult to order containers.
Meanwhile, Phuc Sinh, a major pepper and coffee exporter in Vietnam, said that shipping lines now list prices weekly instead of 15-30 days as before. This can make businesses incur larger shipping costs, or even suffer losses. Some have had to switch to air delivery at extremely high rates.
According to the Vietnam Maritime Administration, since the beginning of June 2024, the rates for shipping containers to European countries and the U.S. have been trending up sharply, with the world container index climbing 12% to $4,716 per 40-foot container in the past week.
To cope with that situation, the administration asked port authorities to coordinate with provincial-level maritime sub-departments, relevant authorities, associations, and units to strengthen supervision of shipping businesses providing container freight services in listing rates and surcharges.
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