Export businesses are restless because of sudden increase in shipping costs.

Fare suddenly adjusted to increase dramatically

The recent insecurity in the Red Sea region due to the Houthi forces in Yemen increasing attacks on Western cargo ships in the region in response to Israel's attack on the Gaza Strip has had a direct impact on shipping rates.

Accordingly, recently a series of major shipping lines such as Maersk, Hapag-Lloyd, and CH Robinson Worldwide, CMA CGM... have announced that they will collect additional surcharges due to having to change the shipping routes of Asia - Europe, avoiding going through the Suez Canal and the Red Sea area.

In particular, the world's leading shipping company CMA CGM has announced an additional surcharge of 325 USD - 500 USD/20-ft container on routes from Northern Europe to Asia and from Asia to the Mediterranean region.

Not only has CMA CGM announced an increase in freight rates, but it is also expected that the transit time for goods between Asia and Europe will increase significantly. The reason is that the company has to temporarily stop going through the Suez Canal in the Red Sea - specifically, it has to go around Africa's Cape of Good Hope.

Export businesses worry about being affected by rising shipping rates (Illustration photo)

How is this route affected by Vietnamese businesses exporting?

The increase in freight rates by shipping lines has had a direct impact on businesses exporting goods through the Red Sea region. Specifically, according to Mr. Nguyen Huy Tien - Head of Import-Export Department of Thao Nguyen Company Limited, currently, the company's export orders to the Middle East are having to pay an additional fee of 300 USD/20ft container, with the increase of 600 USD for 40ft container.

Sharing with reporters of the Industry and Trade Newspaper, Mr. Tran Quoc Manh - Vice President of the Handicraft Export Association, Chairman of the Board of Directors of Saigon Production and Trade Development Joint Stock Company (Sadaco) - also said: Because the company has a number of orders that must be transported through the Red Sea area, it has recently received notices of increased freight rates from a number of shipping lines. The increase is from 200-500 USD/40 ft container with the application period from January 1, 2024.

However, according to Mr. Manh, what worries businesses is not the shipping fares on this route, but that other routes may also increase in price due to the prolonged congestion.

“The increase in shipping costs during this period will cause difficulties for businesses because orders from wood industry businesses have only recovered by about 20%. Not to mention many other costs have also increased, making it more difficult for businesses,” Mr. Tran Quoc Manh worried.

Sharing the same concern, Mr. Phan Van Co - Marketing Director of Vrice Company Limited shared that the freight rate has increased by about 500 USD/40 ft container since December 15, 2023. It is forecasted that the freight rate may increase further if the security situation in the Red Sea area worsens. "Shipping ships will have to go around, leading to longer travel time and exporters in the Asian region will be most affected," said Mr. Co.

According to businesses, the Suez Canal is currently the shortest waterway connecting Asia and Europe, with about 15% of global waterway traffic passing through the canal. The canal is one of seven important choke points for the transportation of goods, especially energy products in the world. Therefore, if insecurity in this area continues, it will have a significant impact on businesses' export activities.

Faced with the above situation, the Import-Export Department (Ministry of Industry and Trade) has requested industry associations and logistics associations to strengthen monitoring and regularly update the situation to businesses in the industry to grasp information to proactively plan production and import and export of goods, avoiding congestion and other adverse impacts.

The Import-Export Department also requested import-export enterprises to closely monitor the situation, proactively develop appropriate plans, and discuss with partners so that, if necessary, they can extend the time for packing and receiving goods. In particular, associations and enterprises should promptly discuss and report to the Ministry of Industry and Trade and relevant ministries and branches on arising issues for joint handling.

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