According to the Vietnam Maritime Administration, from January 2024, container shipping rates by sea, especially shipping routes to Europe and the US/Canada, will increase significantly compared to December 2023, depending on the carrier and route.
Since February, shipping rates have gradually decreased, but are still much higher than the same period in 2023 (Illustration photo).
Container freight rates peaked at the end of January 2024 at around $3,900-4,200 per 40-foot container, about three times higher than in November 2023.
However, by February 2024, freight rates have decreased because the Asian market including China, Vietnam and some other countries is during the Lunar New Year holiday. At the same time, this is the low season, along with declining market demand, so the demand for import and export of goods is not high.
To date, fares have continued to trend downward, currently down 12% from the peak in January 2024, but are still 82% higher than the same period last year, about 131% higher than the average price before the Covid-19 pandemic and about 24% higher than the average price of the past 10 years.
Specifically, the price of shipping a 40-foot container from Vietnam to Europe has decreased from 5,500 USD to 3,500 USD, and from Vietnam to America has decreased from 3,500 USD to 2,500 USD.
The reason for the increase in transportation prices, according to the explanation of the Vietnam Maritime Administration, is that normally with the transportation route from Asia to Europe, the West Coast of the US, the ship's journey goes through the Red Sea and the Suez Canal, this is the shortest route with optimal cost.
Since the end of 2023, due to conflicts in the Red Sea region, shipping lines have had to change routes, not going through the Suez Canal but going around the Cape of Good Hope, making the ship's journey 10 to 14 days longer than before, incurring many additional transportation costs, which has caused shipping prices to increase.
The maritime industry in Vietnam is characterized by the fact that imported and exported goods to Europe and America are mainly purchased CIF and sold FOB (delivery and receipt of goods at the wharf in Vietnam) accounting for 80-90%. Therefore, the rental of vehicles and payment of freight are mainly undertaken by foreign partners.
However, there are still about 10-20% of goods directly paid by Vietnamese import-export owners. The increase in freight rates mainly affects small customers, short-term contracts, and unstable cargo volumes.
For customers signing long-term annual transportation contracts, freight rates are usually stable and not affected by price increases during the term of the contract.
It is forecasted that in the coming time, the transportation market situation will still have many complicated developments due to the armed conflicts that have not ended. Therefore, the Vietnam Maritime Administration recommends that import-export enterprises need to proactively plan production and transportation plans, ensuring that signing long-term contracts will significantly reduce the impact of freight rate fluctuations.
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