Businesses' profits eroded by skyrocketing shipping rates

Speaking with Lao Dong, Mr. Tran Van Linh - Chairman of the Board of Directors of Thuan Phuoc Seafood Company - said that the EU market accounts for about 25% of the export market share of Vietnamese enterprises and this is also the area with the highest increase in shipping costs.

Accordingly, the shipping freight from Vietnam to Europe is around 4,000 - 5,000 USD/container, 2 - 3 times higher than the end of last year. On average, a container exported to the US costs around 6,000 - 7,000 USD, double the previous price.

Freight rates to regions such as China, Japan, South Korea and Southeast Asia also increased, ranging from 1,000 - 2,000 USD/container.

"High sea freight rates along with difficulties in the market and orders have eroded the profits of businesses, especially seafood exporting businesses like us.

In addition to the increased freight rates, the shipping time also takes 7-10 days longer. This disrupts our delivery and production plans as well as our partners'," said Mr. Linh.

The increase in sea freight rates has caused many businesses a headache because Vietnam's export activities to major markets such as the US, EU... all depend on foreign shipping lines.

In fact, transportation costs currently account for over 15% of product costs, but all empty containers are concentrated in China due to higher costs than other countries, so it is predicted that there will be a shortage of empty containers in Vietnam, pushing shipping rates to continue to increase in the near future," said Mr. Phan Dinh Quan, Director of EZ Shipping Co., Ltd. ( Hanoi ).

The biggest concern for businesses is not knowing what the upcoming freight rates will be. If the increase continues, buyers will certainly ask to share the increased shipping costs with subsequent orders, said Mr. Tran Huu Hau - General Secretary of the Vietnam Cashew Association.

Mr. Hau suggested that shipping lines need to be transparent and promptly inform about related issues so that businesses can grasp them and have a response plan to minimize damage.

Regarding the increase in shipping costs, Mr. Tran Quoc Toan - Deputy Director of the Import-Export Department ( Ministry of Industry and Trade ) - told Lao Dong that the increase in shipping costs has been going on for a long time, and the Ministry of Industry and Trade has implemented activities and solutions to overcome the problem.

In particular, the Ministry of Industry and Trade has coordinated with the agency in charge of researching the increase in freight rates, promptly coordinating to propose appropriate solutions, implementing seminars, providing information to spread to businesses to be proactive in import and export activities. At the same time, the Ministry also coordinated with the Ministry of Finance and the Logistics Association to discuss timely handling measures.

Source: https://laodong.vn/kinh-doanh/doanh-nghiep-bi-bao-mon-loi-nhuan-vi-cuoc-van-tai-bien-phi-ma-1362929.ldo