At the peak delivery period at the end of the year, many businesses exporting to Europe had to “bite their teeth” to pay for sea freight, which increased 5-6 times and a series of surcharges. Experts recommend that businesses need to diversify typical transportation alternatives such as railways.
Logistics “5 increases”, businesses grit their teeth and endure
According to the Ministry of Industry and Trade, in the first 10 months of the year, trade turnover in the Europe – Americas region still reached 18.8%, reaching nearly 170 billion USD.
However, the COVID-19 epidemic has disrupted the global supply chain, causing congestion on container shipping routes, affecting Vietnam’s exports to major markets such as the Americas and Europe.
At the forum “Developing Vietnam’s logistics industry with the Europe – America region”, a representative of Long Beach port, (USA) said that the port congestion and lack of empty containers in the past time are unprecedented. and the port enterprises themselves do not have experience in handling.
Since the beginning of the year until now, Long Beach has had to handle 9.5 million Teus of cargo, up 5% compared to 2019. Port congestion and cargo congestion have become more and more stressful when the US government implemented measures. Social distancing, goods from air to sea.
Port congestion makes businesses in sectors such as apparel, footwear, agricultural products, electronics, and consumer goods bear more costs.
Mr. Bui Huy Son, Counselor of Vietnamese Mission and Trade in the US, said that in the first 10 months of this year, the total export turnover of this group of goods to the US reached 25 billion USD, accounting for 33% of the total export turnover of Vietnam to the US. .
“If this process is long and serious, Vietnam’s export businesses will lose links with the transport chain and depend on other businesses,” said Mr. Son.
The Port of Long Beach is in a state of congestion and overload. (Photo: Advantage Logistics)
This situation is also causing seafood export enterprises to suffer.
Mr. Nguyen Hoai Nam, Deputy General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP) said: “From a logistics perspective, Vietnamese seafood exporters are facing 5T. That is increasing freight rates, increasing sea transportation time, increasing “booking” (orders for booking), increasing delay of orders, increasing fees.
This puts pressure on businesses when exporting previously signed orders.”
This person informed that the sea freight to the US at the end of 2020 is 3,000 USD/container, but now the East coast has increased to 17,000 USD/container, the West coast is about 13,000-14,000 USD/container. Freight to Europe ranges from 12,000-14,000 USD/container.
Similarly, freight rates to the Middle East currently fluctuate from 10,000 to 11,000 USD/container, up 7 times over the same period in 2020.
In addition, the shipping time also increased on average 7-10 days compared to before, even many orders delivered to customers 2-3 months late.
Shipping lines “lay” dozens of fees such as loading and unloading fees, storage fees, clean fuel, container balance, cleaning fees, port jams and is expected to have a new fee related to COVID- 19.
“Logistics 5 increase means that the cost of products will have to “carry” a kind of cost, affecting the competitiveness of Vietnamese seafood with competitors such as Ecuador, India, Thailand … “, Mr. Nam speak.
Enterprises currently only know how to “bear with” the increased charges and fees, trying to sign shipping contracts with large shipping lines because at the present time, being able to rent containers and deliver goods is an advantage.
Rail transport can be an alternative
In order to relieve pressure on the seaport system, Mr. Hans Kerstens, representative of Eurocham, said that Vietnamese businesses can look for alternative road and rail transportation solutions for ships at the peak period.
That option does not depend on the sea but must ensure that the goods arrive on time and the business needs to prepare scenarios for arising situations.
Experts recommend that businesses need to diversify alternative shipping options by sea. (Photo: VLR)
Sharing the same view, Mr. Tran The Hung, General Director of Railway Transport and Trading Joint Stock Company (RATRACO) said that in the context of the world’s sea logistics system being strangled, Vietnam’s exports to Europe could be affected. alternative modes of transport such as railways can be used.
“In 2021, we will coordinate with importers and exporters and shipping lines to organize 3 regular shipments per week, running directly from Vietnam to Europe.
Rates range from 12,000 to 15,000 USD/container depending on the destination, equivalent to sea freight at the present time. However, the advantage of rail transportation is about 20-25 days, less than a week compared to sea freight. Therefore, businesses can refer to this option,” said Mr. Hung.
In another aspect, Mr. Rolando E.Alvarez Viera, Vice President of the Federation of International Freight Forwarders Associations (FIATA) said that in order to solve the shortage of containers, port congestion, the Government and port businesses. Sea, logistics needs to consider the option of digitizing the national logistics process and building a one-stop mechanism for commercial transactions.
This position requires a near-shore strategy for investors, ie distribution centers near the shore.
For example, if selling a product to Northern Europe, the distribution center should be located near Germany, or the port of Rotterdam (Netherlands) or selling to Europe or Southern Europe, it should be located in Spain, North Africa; sales to South America, Uruguay, Brazil will be the place to locate this distribution center; America will be Panama.
However, these centers need to ensure logistics connectivity between countries and complete infrastructure.
According to VietnamBiz.vn
