Spectacular increase

After two years of being affected by the COVID-19 pandemic, the demand in the markets has recovered and exploded strongly while the seafood supply in the markets is not enough and price has increased. The conflict between Russia and Ukraine has made the global seafood supply more unstable. In that context, Vietnamese seafood enterprises have seized "golden opportunities" to sign contracts with much higher prices compared to the same period last year.

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), seafood businesses are very confident with long-term orders in large quantities. Seafood exports in the second quarter are growing strongly and are forecast to reach US$3 billion - a record milestone in quarterly export value of Vietnam's seafood. Mr. Tran Dinh Luan, Director of the General Department of Fisheries, forecast that the target of exporting US$9 billion of seafood in 2022 is feasible.

Data from VASEP shows that Vietnam's seafood exports in April reached US$1.13 billion (up 50.6% over the same period last year), bringing the total export value in the first four months of the year to more than US$3 billion (up to 46.8%).

Specifically, with shrimp, exports in April reached US$406 million, bringing the export value of four months to US$1.36 billion (up 41.5% over the same period last year). It is expected that shrimp export output will increase even more in the second quarter when officially entering the harvest season with the largest output of the year, lasting until the end of the third quarter.

Pangasius exports in the first four months of the year reached US$950 million (up 94%), nearly double compared to the same period last year. Many pangasius markets are growing spectacularly such as China (up 161%); the U.S. (128%) and Canada (69%). The U.S. and China are the key markets, which are decisive for maintaining the growth rate of seafood exports in the coming months.

In the U.S. market, the decrease in U.S. catfish production, high inflation and anti-dumping tax in the 17th administrative review of anti-dumping tax (POR17) have benefitted many pangasius businesses. The number of pangasius enterprises allowed to export to the U.S. has increased and the average export price of pangasius to the U.S. has peaked. Those are the main factors that made pangasius exports to the U.S. in the first four months of this year increase dramatically, reaching US$232 million, up 128%.

As for the Chinese market, there is a shortage of seafood supply for export processing and domestic consumption, so the demand is forecast to be very large. According to Ms. Le Hang, China's "Zero Covid" policy has not had much impact on Vietnamese seafood exports because businesses have adapted to this in the past two years. Seafood exports to China in the first four months of the year reached US$578 million, with pangasius products accounting for 53% of seafood exports to this market.

Exports to the European market are also rising impressively as consumer demand increases due to competitive pangasius prices, and can fill the gap in some products that are in short supply from Russia.

Potential risk of costly input

Although export orders are abundant, production activities recover, and labor is stable, the main manufacturing industries are struggling in a "price storm" due to the sharp increase in input costs. The cause is due to the double impact of the pandemic and the Russian-Ukrainian conflict. In China, the “Zero Covid” policy caused Chinese ports to be congested, and the supply chain slowed down, pushing freight rates to remain high.

According to the Import-Export Department, Ministry of Industry and Trade, sea freight rates continuously set new peaks, increasing by 4-6 times and showing no sign of cooling down. Specifically, sea freight to the U.S. from US$3,000/container before the COVID-19 pandemic has now increased to US$13,000-14,000/container to the West Coast, and to the East Coast US$17,000/container.

Input costs from raw materials, feed, and packaging have all increased, combined with high sea logistics costs, which is the biggest challenge for most businesses. Although costs increase, it is difficult for businesses to raise prices because they have signed export contracts in advance. According to experts, businesses need to be careful of the "price storm" as revenue may grow strongly but net profit may decrease due to high costs.