One of the reasons why shipping rates have skyrocketed compared to before the outbreak is the prolonged supply chain disruption leading to a shortage of empty containers in Asia.
Talking to a reporter, Nguoi Lao Dong Newspaper, on the afternoon of March 23, Mr. Nguyen Xuan Chau – Chairman of the Board of Directors, General Director of Viet Long Saigon Joint Stock Company – expressed concern that shipping rates are now 10 times higher than the previous period. period before the outbreak of Covid-19.
“Before the pandemic, the freight rate for a 40-foot refrigerated container to Europe was about 1,600-1,800 USD and to the US about 2,000-2,200 USD. Currently, the epidemic situation in the world has gradually been controlled stably. More goods are transported, but the above-mentioned container freight to Europe is up to 16,000-18,000 USD, to the US is 22,000 USD “- Mr. Chau compared.
Hundreds of thousands of difficulties
According to Mr. Nguyen Xuan Chau, with the above freight rates, not only exporting enterprises (DN) face difficulties, but the domestic animal feed industry is also heavily affected because this industry depends on almost all raw materials. imported materials. As a result, many farmers have abandoned their ponds and camps… because the more livestock they raise, the more they lose.
“Although state management agencies have said that they will consider severely sanctioning forwarding companies with signs of price manipulation, in reality, the price is determined by the market. Vietnam does not have a multinational shipping company, so it is very difficult. difficult to get involved in the tariff story of the shipping lines alliance “- Mr. Chau acknowledged.
Dang Dinh Long, General Director of Mega A Trading Investment Joint Stock Company, said that refrigerated containers containing agricultural products exported to China are severely lacking because the demand for goods exported by sea has increased dramatically when China controls the export market. strictly control roads to ensure the goal of “zero Covid”.
Mr. Long also said that the container freight rate has increased continuously in the past 3-4 weeks, with a week increasing by 1,000 USD/container. The value of goods per container is only about 12,000-13,000 USD, but the freight is too high, making the total cost to the port of your country up to 22,000-23,000 USD/container.
Ms. Tran Thi Ngoc Nga, RFA Company (an American company based in Vietnam), said that if in previous years, customers were only interested in the price of raw cashew nuts and the price of cashew kernels, now they have to monitor more freight rates. ship. The characteristic of the cashew industry is that most raw materials must be imported from Africa for processing and then exported, so the increase in transportation costs makes the cost very high.
“Buyers in the US are now very cautious in importing goods because they can’t control the shipping costs, so they can’t calculate the selling price. Many customers have the mentality of waiting for the price to be stable before placing an order” – Ms. Nga information.
With the rice industry, Mr. Nguyen Van Thanh, Director of Phuoc Thanh IV Production – Trading Co., Ltd (Vinh Long province), said that currently, the transportation cost is higher than the price of rice! Therefore, enterprises are not only stuck with existing export plans but also find it difficult to penetrate new markets.
A representative of Hyundai shipping company said that since the beginning of the year until now, container freight rates to many markets have increased by 60%-70%, some markets are not too “hot”, the increase is also up to 30%. Currently, the container price from Vietnam to China is up to 5,000-6,000 USD/container, and the other way around is about 2,000 USD/container.
For the US market, the container freight in the way is 14,000-15,000 USD, the return is only 2,000-2,500 USD/container. “The high export demand during this time makes the shortage of empty containers to export goods, while investing in increasing the number of containers is very difficult and expensive,” said a representative of a shipping line.
Do not expect to reduce the fee
The report of Hai An Transport and Unloading Joint Stock Company shows that the impact of the pandemic from last year to now has affected the global economy and trade. Congestion at major seaports in the US, Europe and China due to blockades and lack of workers… caused the global supply chain to break.
Congestion increases the turnaround time of ships by 20%-25%, causing a crisis of shortages of ships and containers, pushing up container freight rates compared to before the pandemic. Meanwhile, the demand for economic recovery after the pandemic pushes the volume of container shipping globally is expected to increase by 6%-8% per year. Therefore, many maritime consulting organizations predict that the container shipping market will keep its current price level for the next 2-3 years.
Analyzing the story of the sharp increase in container freight rates over the past time, Mr. Nguyen Tu Anh, Director of the General Economic Department – Central Economic Commission, said that from May 2021 until now, the Covid-19 epidemic broke out strongly, causing The customs clearance time is longer, plus the quarantine stage reduces the container turnover rate.
As a result, there is an excess of containers in North America and Europe while the shortage in Asia is increasing. “It is very difficult to predict when the cost of chartering and container freight will decrease, but we only hope not to increase further,” said Mr. Nguyen Tu Anh.
According to Mr. Nguyen Xuan Chau, the epidemic situation has caused a sharp decrease in the demand for domestic imports because of the tight spending mentality, leading to a decrease in the volume of containers sent to Asia in general and Vietnam in particular. On the other hand, the breakdown of the supply chain has not been overcome, which is one of the important reasons why containers from Europe and the US return to Vietnam slower than before, so there are no empty containers to export. This situation is expected to continue.
“The Russia-Ukraine tension has not had a negative impact on the scarcity of containers and the increase in container rates. There are no new factors causing the container freight rates to continue to increase, but the rates are still increasing rapidly, which means that in addition to the reasons mentioned above. Above, there may be another reason that is very difficult to verify, that is, shipping lines start to set prices!” – Mr. Chau raised doubts.
Enterprises proactively respond
Mr. Phan Minh Thong, Chairman of the Board of Directors of Phuc Sinh Group, said that on March 23, the company built 30 containers of coffee of all kinds to export to many countries around the world. Although the container freight rate has increased, at this time, the enterprise has actively negotiated for the buyer to pay the shipping fee.
“Shipping freight has established a new price level. The market was shocked at the first stage but gradually accepted it, orders continued to be placed again. Our export volume in the first 3 months of this year. 20% increase compared to the same period in 2021, orders are effective thanks to the increasing world agricultural product price.We also signed many contracts for long-distance delivery to customers, including terms on shipping prices according to market price at the time of delivery” – Mr. Thong said.
T&G International Joint Stock Company
Address: 352 Hue Street, Le Dai Hanh Ward, Hai Ba Trung District, Hanoi
Hotline: 0345786803
Email: hrm@tginterjsc.com
Website: http://tginternationaljsc.com
