Although pepper export price peaked for nearly 4 years, Vietnam’s pepper export turnover dropped sharply by more than 30%. The reason is that businesses are struggling with the 4th wave of COVID-19 and the skyrocketing freight rates.
According to data from the Import-Export Department, the export price of pepper in August reached the highest level in nearly 4 years. The US and European countries are gradually reopening their economies after a long time fighting the COVID-19 pandemic.
As a result, the demand for goods, including pepper products, increased sharply, especially when the holidays and Tet holidays are coming at the end of the year.
However, it seems that the pepper industry is missing the opportunity of this sharp increase in pepper prices when export results dropped sharply in August.
Accordingly, the amount of pepper exported in August reached approximately 17 thousand tons – the lowest level since February, worth 63 million USD, down 36% in volume and 33.6% in value compared to July. .
The complicated developments of the COVID-19 epidemic caused Vietnam’s pepper exports to decrease in August. Accordingly, the factories had to perform 3 on-site operations and difficulties in domestic transportation and export. has caused pepper enterprises to miss the beat compared to the world.
Talking to the writer Mr. Phan Minh Thong, Chairman of the Board of Directors of Phuc Sinh Group said that during the implementation of the “3 on-site” requirement, his factory could operate 30% of the time because it could not meet all the requirements. food and accommodation for all workers. In addition, the company also struggled to get a travel permit, which also halted production.
“It took us a month to get a travel permit,” Mr. Thong said.
According to separate sources, Phuc Sinh’s pepper exports in the first 8 months of this year decreased by nearly 21% over the same period last year to 12.4 thousand tons.
Phuc Sinh’s pepper export volume in the period January 2020 – August 2021. (Data: aggregate. Unit: tons. Chart: US)
Phuc Sinh is the 4th largest pepper exporter in Vietnam and also the one that recorded the sharpest decline among the 4 big pepper industry players.
Enterprises lose customers to competitors because ocean freight costs are too high
The domestic production has been difficult, now the problem of shipping charges is too high, causing pepper exporters to face the risk of losing customers or even going bankrupt. Goods brought to the port were congested, export contracts could not go because the freight rates were too high.
For Vietnamese pepper, the US is the main market with export volume accounting for 20-25% per year and has always maintained a stable purchasing power until now.
In addition, the EU is also a key market and target market for most businesses in the context of free trade agreements to increase the purchasing power of this market.
However, according to VPA, these are the two sea freight routes with the most unusual and gallant increase in freight rates with an increase of about $ 1,500-2,000 for a 40-foot container every 2 weeks.
Enterprises also share with carriers that are affected on a large scale, leading to higher freight rates. However, the increase should be strictly controlled, open and transparent, and with a pre-announced schedule.
Compared to 2020, the freight to the EU is usually stable at 800-1,200 USD for a 40-foot container, but now it has increased over 11,000 USD, which is 12-13 times higher than the price at the beginning of 2020. shipping to the US from $2,000-3,000 for a 40-foot container from the beginning of 2020 to now has increased to $13,500, ie an increase of 5-6 times.
According to VPA’s comparison, charges from other Asian countries such as India to the US and EU have not increased as much as in Vietnam. VPA also thinks that this increase is unreasonable and unusual because the price of oil – the core cost to make up the price in sea transport is at a much lower price than before.
According to VPA’s information, recently, the US and EU have switched to buying pepper from Brazil because the quality of pepper is not too different from that of Vietnam and most importantly, the shipping cost from Brazil to the US is only equal to that of Vietnam. 1/3 from Vietnam and from Brazil to the EU is only 1/10 of that from Vietnam.
Mr. Nguyen Tan Hien, Deputy General Director of Tran Chau Import-Export Trading Service Joint Stock Company, and Vice President of VPA said, “All costs are very high. The current pepper price is about 70,000 – 75,000 VND / kg plus the logistics costs in the sky, no customer can buy it.
This stage is still the end of the season, inventory is not much. While Brazil and Indonesia have stock and transport costs are much cheaper than Vietnam. Therefore, customers will move to Brazil and Indonesia instead.”
Tran Chau is the largest pepper exporter in Vietnam. However, in the first 8 months of the year, the export volume of this enterprise also recorded a decrease of 11% compared to the same period last year.
Before this issue, VPA has sent official dispatches to the Ministry of Industry and Trade, the Ministry of Transport, the Ministry of Agriculture and Rural Development, the General Department of Vietnam Customs and the Vietnam Association of Logistics Service Enterprises to report to the Prime Minister for consideration. remove the “problem of lack of containers, lack of space” and bring the freight rates back to the way they were before.
According to VietnamBiz
