Ms. Nguyen Thi Kim Huyen, Chairwoman and General Director of Global Maritime Services Company - a business operating in the field of logistics and freight forwarding, said that not only shipping rates are increasing but many other related issues are also arising.
Container shortage and Asia rates start to rise as tensions in Red Sea escalate
The reason is that the Panama Canal is currently experiencing a drought, so shipping lines are diverting to the Suez Canal or the Cape of Good Hope. The transit time is 15-20 days longer than the normal schedule, causing shipping rates to increase. In addition, tensions in the Red Sea have caused shipping times to be extended, affecting the overall operating capacity of the entire route, specifically delays, the possibility of turnarounds, and omissions that occur frequently on routes in the Middle East and Mediterranean, causing shipping rates to double. Costs have increased due to expenses such as ship protection and war surcharges. Contracts that shipping lines signed with customers before the conflict and have just shipped goods will incur losses because they have to cover these expenses. Therefore, some shipping lines have cut back on operations and prioritized long-distance routes such as the US and Europe, making the situation even more tense. This has led to an imbalance in container loads due to long transit times and slow turnarounds.
Prices have also begun to increase for routes within Asia. This situation is expected to last until the end of the second quarter of 2024, causing many challenges to production, business and export activities in Vietnam as well as the world.
Ms. Huyen said: The increase in freight rates has caused export activities from markets like Vietnam to stagnate, and many units cannot export goods. On the other hand, the US has just gone through a long holiday, so the loading and unloading of goods is also slow, and goods are stuck at the port for many days, causing many costs to arise. "These factors are pushing up the prices of imported and distributed goods in the US market. Therefore, businesses importing and distributing goods to this market are operating in a state of restraint to probe costs and market acceptance," Ms. Huyen said.
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