Rising shipping costs worry Vietnam’s exporters

As the ocean shipping business revives following the Great Recession, the cost of sending Vietnam’s goods to the US or the EU has doubled, weakening the nation’s competitiveness in the world market.

The transport fee for carrying Vietnamese goods to other countries in the world, especially the big markets like the US or the EU has increased by two folds in comparison with the same period of the last year, which has weakened the competitiveness of Vietnamese goods.

Heavy losses

Nguyen Phan Anh, Business Director of the Singapore shipping firm APL in Vietnam, says that most export goods from Vietnam’s ports must bear higher fees than the goods of other regional countries, though the sea route and the destination points are the same.

For example, carriage of a 20 foot container of goods to Yokohama from Da Nang costs $300-400 more than from Thai ports.

Only cargos shipped to the US from Vietnam’s new deepwater port near HCM City, Cai Mep, can be shipped at the lowest ‘world rate.’ Fees for shipping from other Vietnamese ports bear premiums of several hundred dollars more per standard (40 foot) shipping container.

Thuan Phuoc Seafood Co. regularly exports seafood products to the US, Europe, Japan and South Korea through Da Nang port. According to its director, Tran Thien Linh, Vietnamese enterprises must pay $1000 more than Chinese competitors to ship a 40 foot container to Europe. Linh said that this has seriously affected competitiveness.

“Every year, we export 400-450 containers to other countries in the world. If we pay $500 more for every container due to the higher transport fee, this means that we ‘lose’ as much as $225,000 a year,” Linh said.

A shipping firm manager explains that transport fees from Vietnam are generally higher because except for Cai Mep, the nation’s ports cannot accommodate the biggest container ships. “Shipping firms cannot bring big ships to the ports. They can only bring smaller ships which will gather goods for transshipment to larger vessels in ports in other countries before they are carried to export countries.”

Other expenses at some ports in Vietnam are also about ten percent higher than in neighboring countries.

Transport costs are rising weekly

Vietnamese exporters are now nervous because shipping fees have increased sharply now that the volume of goods has returned to normal. An export company in HCM City said that just a few months ago, ‘door-to-door’ service (a package including loading goods, carrying them from storage to Cat Lai Port, completing customs clearance, shipping goods to a destination, clearing customs and delivery to a warehouse there) from HCM City to France cost 50 million dong per half-size (20 foot) container. Now it’s twice that much.

Vietnamese exporters that ship goods in FOB mode (i.e., the importer pays the shipping cost) are complaining that buyers are now asking them to lower their prices to compensate for increased shipping costs.

Lien Anh Co., an HCM City shipping agent, reports that sea transport costs for carrying goods to the US and India all have increased, and shipping firms have begun collecting surcharges. Lien Anh confirms that shipping costs to Europe have doubled in the last year.

The APL representative says it’s just a matter of supply and demand. Transport costs are up sharply because the economy has recovered and the volume of goods has increased to the point that shipping firms are struggling to meet the demand. At the moment, instead of posting rates quarterly as previously, shipping firms now can only quote their rates a month, or even a week, in advance.

Tuoi tre

Tags: vietnam logistics, Vietnam shipping costs