As reflected by exporting enterprises, since the end of 2020, container shipping rates have continuously increased from US$1,000/20-foot containerto nearly US$5,300/20-foot container. For a 40 feet container, this price was even higher, making it difficult for exporting businesses.

Enterprises are facing the situation of increasing container shipping rates.
Photo: Huy Kham

Is there a situation of taking advantage of pushing container prices up?

As a representative of an enterprise specializing in exporting processed agricultural products such as cucumber, tomato, pineapple, mango, Mr. Nguyen Truong Nghia, Director of Viet Xanh Agricultural Processing Joint Stock Company spokewith Customs News about the difficulties of the business.For 3 to 4 months, businesses are facing the situation of increasing container shipping rates and there is a risk of higher prices in the future.

According to Mr. Nghia, currently the enterprise is subject to the freight rate of a 20-foot container moving from Hai Phong port to the port of Saint Petersburg (Russia) ranging from US$4,700 to US$5,300, depending on the shipping line.

For a 40-foot container, the priceis even higher, up to nearly US$10,000/container while previously, the cost of transporting a 40-foot container from Hai Phong port to Saint Petersburg port was US$1,800.

With the constant price increase, many agricultural export enterprises are facing bankruptcy because agricultural products are low-value and low-interest products. If the business sells at the FOB price, the buyer has to pay the freight himself, but if the business sells the CIF price, it will be bankrupt. In particular, despite such a high price, it isnot easy to order containers, many shipping lines have arranged for businesses' goods, but they have to be postponed.

"We are facing a situation where freight rates increase, but it does not mean there will be an empty container for shipping, but shipping lines continuouslydelay because there is space onboard but empty containers are not available. Sincethe beginning of the year, we have had to accept to share shipping costs with our partners, even now our export containers have to break and even lose money just to keep customers and if the goods have been produced, processed and cannot be exported, we will go bankrupt. Therefore, although at present, the price of agricultural products is very cheap, not all businesses dare to process because they cannot be exported after processing. The closest port we used to travel was US$500/container, but now it is US$1,800/container.”

According to the Director of Viet Xanh Agricultural Processing Joint Stock Company, in the face of the shortage of empty containers, many shipping lines also push prices up. After working with four shipping lines, they all offered different prices. If you want the goods to go immediately, the price will be US$5,300/container, if you wait, it will be US$3,700/container; the other company will quote from US$3,700 - 4,000/container. The price bracket is negotiated by businesses with shipping lines. Therefore, I am concerned that a shortage of containers is not reality; in fact, I suppose that the current shipping lines are taking advantage of this situation to push up prices.

Efficient transfer avoids local shortage

According to the survey results of the Vietnam Logistics Business Association (VLA), the difficulty of businesses is about the shortage of empty containers at each link in operations with shipping lines. Specifically, the sales department accounts for 17%, the delivery of containers in depot accounts for 40% and the booking department accounts for 43%. In addition, many businesses believe that the difficulty in transporting goods is mainly through Asia and the Americas.

To solve the above situation, VLA also offers positive solutions so that businesses and stakeholders can find suitable measures to improve the current shortage of empty containers. The VLA argues that there is a need to increase the movement of empty containers between ports and the role of business partnerships in moving empty containers.

In addition, it is necessary to strengthen authorization to repair empty containers for depots to effectively meet quality and reduce waiting times. Shipping lines need to accurately inform the location of empty containers so that businesses can reduce travel costs and time. Efficiently move empty containers to avoid local shortages. The owner of the goods (especially the factory owner) needs to effectively use the empty container to return it to the depot for use by other shippers.

As businesses are in the peak season for export but facing difficulties due to the lack of empty containers to deliver to exporters for packing, causing sea freight rates to European routes to rise sharply, directly affecting the export activities of businesses, the Vietnam Maritime Administration (Ministry of Transport) issuedDecision No. 194 / QD-CHHVN dated February 23, 2012 on the establishment of a working group on the price, surcharge on the service of shipping container goods by sea.

Accordingly, the working group will be responsible for inspecting the compliance with regulations on listing prices and surcharges in addition to shipping container freight by sea in accordance with Decree No. 146/2017 / ND-CP of the Government on the listing of prices and surcharges in addition to the service charge of shipping container goods by sea. And handle violations in accordance with the Government's Decree No. 142/2017 on sanctioning of administrative violations in the maritime domain.