Rates increased 10 times

"Shipping rates have increased and are now 10 times higher than at the beginning of the year, too much for businesses to bear," said Mr. Thai Nhu Hiep - Director of Vinh Hiep Company (Gia Lai). The owner of this coffee production and export business said that the freight rate for each container (40 feet) to Europe is currently between 8-10 thousand USD. Meanwhile, his company exports 10,000 tons of coffee every month, mainly to the US and EU. So the team cost is very high. The reason for the high freight rates is the lack of empty containers. This situation has lasted all year since the outbreak, but the level of shortage is increasingly serious because when the epidemic subsides, the demand for transportation increases sharply, so there is a shortage of containers.

Production workers at Phuc Sinh Company. Photo: UP

Mr. Dinh Gia Nghia - Deputy General Director of DOVECO Company (Gia Lai Branch) also confirmed that shipping rates have increased 10 times compared to last year and are even at 11,000-12,000 USD/container 40 feet away. EU and US markets. Because if you want the goods to go faster, you have to pay a higher fee. Each month, the company exports 1,500-2,000 tons of products to the US, Europe and China. “In order to have enough containers, we have to take the goods to all the ports, which makes the transportation fee go up a lot,” Nghia said.

Ms. Ngo Tuong Vy-Deputy Director of Chanh Thu Fruit Import-Export Co., Ltd (HCMC) said that currently, logistics charges are out of control of enterprises and also a difficult problem for enterprises exporting agricultural products. . “Freight after the epidemic was 7,000-8,000 USD/container, now it has jumped to 10,000 USD/container. Meanwhile, air freight rates are increasing weekly. We have just received the latest notice that the freight is 8.2 USD/kg of goods; while before a week it was 7.5 USD/kg. With the current rapid increase in freight rates, businesses are "stretching" to produce, "- Ms. Vy said.

Nguyen Dinh Tung - General Director of Vina T&T Import-Export Company (HCMC) said that the freight rate for shipping containers to the US is currently 10,000 USD/container (40 feet) to the West Coast port and 16,000 USD/container to the shore port. In the East, this price increased ten times compared to the time before the epidemic.

To get the container, businesses must accept to pay a very high price. However, the train is not always available. A shipping agent in Ho Chi Minh City confirmed to Tien Phong on the afternoon of November 25, that seats on the ship are very scarce because they prioritize countries that are willing to pay very high fees. Currently, China is willing to pay double fees, so shipping lines give priority to these enterprises.

Congested warehouse, port

Mr. Thai Nhu Hiep said, because of the lack of containers, the lack of transport ships, the delivery of goods is sometimes a few weeks, sometimes up to a few months. Even though there are no ships, businesses still have to produce according to signed orders and store them in stock so that any time partners need, they will have goods for immediate delivery, otherwise they will be severely fined. So the inventory is so much that there is not enough warehouse to store it. “Leasing a warehouse is not easy. People with warehouses are only for long-term rental. If the business rents for a long time but only for a short time, it will be too wasteful and the cost will be very high. While this situation of congestion does not know when it will end…”, Mr. Hiep said.

Mr. Nguyen Dinh Tung said that businesses are still facing port jams. For a batch of fruit to reach the US, which normally takes 3 weeks, now it takes 3-4 more weeks to unload and bring to the warehouse. Therefore, businesses have to temporarily suspend the introduction of many fruits such as mangoes and dragon fruit into the US market because they cannot wait for too long. Currently, Vina T&T brings frozen durian, fresh coconut, and dragon fruit to the US with a monthly output of only about 20 containers by sea and 20 tons by air.

Because of high freight charges, while unable to meet orders in time, domestic enterprises are facing the risk of changing markets to foreign partners. “Transport charges have skyrocketed, especially recently by air. Fees increase, importers have to bear; but too high, partners will look for other markets to have cheaper prices. This will affect domestic enterprises as well as export agricultural products of farmers "- Mr. Tung acknowledged.

Mr. Dinh Gia Nghia is also worried that if this situation continues for a long time, partners will gradually leave the Vietnamese market to go to other markets with lower shipping costs, especially South America, where the shipping fee is low. Going to the EU is only about 75% of that from Vietnam. Therefore, it not only affects production and export enterprises but also significantly affects domestic agricultural production.

A representative of the Association of Seafood Exporters and Producers (VASEP) said that although the freight rates are high, the pre-booking of containers and ships also faces many difficulties due to the lack of containers and space. Enterprises must order ships 15-20 days in advance and are forced to schedule production to match the delivery time and running schedule of the ship. Currently, businesses are still facing the situation that shipping lines automatically cancel their reservations because other businesses agree to pay higher rates to replace or not have enough seats on the ship, putting many businesses in a difficult position. In addition, the update of ship prices is not agreed upon by carriers across markets, making businesses passive in calculating product costs, affecting business efficiency.

Processing coffee for export at Vinh Hiep Company. Photo: Easter

Competitive influence

Phuc Sinh Company (HCMC) every month exports 400-500 containers of agricultural products to other countries, also "calling for heaven" when the current freight rate has increased by 10-12 times compared to two years ago. According to the company's calculations, with the freight this business pays is 15,000 USD/container transported to the EU, every month, enterprises that export about 500 containers will incur a cost of up to 5 million USD compared to the original calculation. Mr. Phan Minh Thong - Chairman of the Board of Directors of Phuc Sinh Company said: "After the epidemic, the company restored production, but orders decreased by 40%. The reason is that after the epidemic, everyone limited their spending, and export orders also decreased. Therefore, we have to do many ways to market our products, find more partners such as launching new products; publishing books to promote the brand; focus on product quality; promote online sales channels,

Many enterprises said that the increased logistics costs have had a significant impact on the competitiveness of enterprises in the world market and many businesses are facing serious losses and production stagnation. To support enterprises, VASEP has repeatedly sent dispatches to relevant agencies to reflect inadequacies and propose solutions. However, the situation has not improved so far.

Talking to a reporter from Tien Phong newspaper , Ms. Tran Thuy Que Phuong - Chief of VASEP Office said that currently, manufacturing and exporting enterprises are in a state of continuously increasing input costs such as raw material prices, electricity and water. , petrol... Not to mention the costs incurred for COVID-19 prevention and control activities at enterprises. Therefore, the continuous increase in freight rates in recent years has contributed to the high cost of products, reducing the competitiveness of Vietnamese seafood compared to other countries such as China and India. , Thailand, Indonesia,…