Shipping lines increased their freight rates many times, even up to 10 times, causing difficulties for seafood exporters, and very high costs. Seafood enterprises have just proposed to the Ministry of Agriculture and Rural Development for help from the Prime Minister.

The rapid increase in freight rates makes it increasingly difficult for businesses.
Photo: T.H

Fees increase exponentially

The Vietnam Association of Seafood Exporters and Producers (VASEP) said that according to member seafood exporters, shipping lines have announced increases in freight rates by 2-10 times (depending on the destination), while it is still difficult for enterprises to book containers, train routes for many important routes, causing sudden difficulties, congestion and very high costs for the seafood export industry of Vietnam in particular and export industries in general.

According to VASEP, since the end of November 2020, the fee for renting containers from Vietnam has increased dramatically. In some ports, the container rental price next month compared to the previous month doubled and is nearly six times higher than the price at the beginning of 2020.

The highest price increase is for refrigerated containers. Specifically, the shipping price of refrigerated containers from Vietnam to the port of Southampton (UK) in early 2020 is US$1,600/container, by December 2020 it was US$5,000/container, by May 2021 it was US$9,100/container.

The cost of transporting refrigerated containers from Vietnam to the port of Los Angeles (USA) in early 2020 was US$1,800/container, US$4,000/container in December 2020 and US$8,000/container in May 2021.

The price of transporting dry cargo containers from Vietnam to Israel in October 2020 is only US$2,300/20 feet container. By March 2021, the price has increased from US$6,300/container (Haploy, Evergreen) to US$7,000/container (Zim shipping line), even some shipping lines have reported charges up to US$11,000/container.

The price of transporting dry cargo containers from Vietnam to Klaipeda port (Lithuania's only seaport) was only US$2,100 - 2,300/20 feet container, but by January 2021 it increased to US$8,000/container.

Not only has the transportation cost increased, enterprises have said that the sea freight charges from other countries are also increasing to a record high.

According to Bloomberg News, the shipping fee for a 40-foot container from Shanghai (China) to Rotterdam (Netherlands) on May 27, 2021 has reached US$10,174, 3.1% higher than a week earlier and up 485% over the same period in 2020. The composite price index of eight major shipping routes in the world has also increased by nearly 300% over the same period last year, putting importers and exporters in a difficult situation.

At the end of October 2020, many container shipping lines such as Wan Hai Lines Ltd., Heung A Line, Interasia, Yaming Shipping Vietnam, Sinokor (Vietnam), Cosco Shipping Lines, Nam Sung Shipping Vietnam, Ever Green Shipping Agency, KMTC Lines, have simultaneously sent notices to customers requesting to increase Rate Retoration (RR) surcharge for goods exported from Vietnam to Asian markets. The increase is from US$50 - 200/container and will be applied from November 1, 2020, which is just a few days after the date of sending the notice to customers.

In addition, Yaming Shipping Vietnam also announced an increase in Peak Season Surcharge from US$150-450.

Difficulty renting containers

According to VASEP, although the rental price of empty containers is increasing day by day, it is still difficult for businesses to order containers due to the reported shortage of containers at ports and routes.

The lack of containers for import and export of goods has been leading to bottlenecks for both the output (export shipments) and input (imported raw material lots) of enterprises, and at the same time increases the cost of renting containers at all locations.

At seaports, causing the risk of disruption to the supply chain of many commodities, and also causing many businesses to pay additional costs for warehousing and storage because shipments are congested at seaports due to the inability to rent shipping containers.

The Maritime Administration has actively held a number of meetings with Vietnam's Import-Export Associations and representatives of shipping lines to find solutions for the situation. However, shipping charges have continued to rise and the shortage of empty containers continues.

Many factors have pushed up logistics costs, significantly affecting the competitiveness of enterprises in the global market. Many orders of enterprises have been canceled, delayed delivery, delayed payment and could not sign new orders, leading to many difficulties.

According to VASEP, the Covid-19 pandemic is still having a heavy impact on many major economies, many importers and exporters are having to encourage and share to overcome difficulties. Seafood enterprises are trying to maintain jobs for thousands of workers at processing factories, the increase in freight rates and rising input costs are making businesses concerned.

Truong Dinh Hoe, General Secretary of VASEP, said that in order to remove difficulties for member enterprises in the current period, VASEP has just submitted a written request to the Ministry of Agriculture and Rural Development to report to the Prime Minister to review and direct to solve the problem of the lack of containers on routes and reduce shipping rates to return to the same as before November 2020.