Not only facing the rising cost of transport, businesses are in a situation where even if they pay their bills, it is sometimes difficult to find containers to pack their goods.
As a food enterprise engaged in exporting for many years, Bich Chi’s rice noodle, rice noodle cake, vermicelli, vermicelli, shrimp cracker are consumed in many markets around the world, with the main focus being the US, Europe, Japan, Korea …
However, in the first quarter of last year, the sudden increase in freight charges had a great impact. “Most customers postpone their orders and wait for the discount to ship again. We cannot export so there is a lot of backlog ”, said Ms. Bui Thi Ngoc Tuyen, Deputy General Director of Bich Chi Food Joint Stock Company.
According to Mrs. Tuyen’s calculations, the last quarter’s logistics costs have doubled compared to October 2020. Empty containers are scarce, but the rental rate has tripled compared to before. “The fee increases but there are no containers for packing, or if there are containers, there are no ships running,” Tuyen said.
The situation is similar for Duy Tan Plastics. Duy Tan’s export sales are accounting for about 20% of total revenue. Mr. Le Anh, Deputy General Director of the company, said that the increase in freight in the first quarter of the year affected the time of ordering and exporting.
“The main routes we are using have rates increasing from 95-231% compared to a year ago. The order reduction due to the increase in shipping costs is estimated at 10% ”, Mr. Anh said. That is not to mention some objective reasons such as sometimes the shipping company does not control effectively the booking, leading to the cancellation of the goods right after the departure date.
A 15,000-ton cargo ship docked at SSIT port, belonging to Cai Mep – Thi Vai port cluster on March 22. Photo: SSIT.
The lack of containers and the sharp increase in export charges by sea is a common story of businesses that trade with foreign countries. According to information from the Association of Seafood Exporters and Producers (VASEP), the seafood export turnover last quarter increased slightly by 3%, but in the first 2 months of the year, export activities were affected “very significantly”.
In addition to rising production costs, the main causes are shortages of ships, lack of containers and skyrocketing freight charges. Mr. Tran Thanh Hai, Deputy Director of the Import and Export Department (Ministry of Industry and Trade), said that the cost of shipping by sea has been increased due to the cost of renting an empty container by 7-8 times higher than before.
So where is the source of the crisis of businesses having to “scratch” in finding containers? There are at least 3 known causes.
Firstly, is the pressure from the sharp increase in cargo demand while the transport capacity has not recovered in time. Ms. Lam Thi Thanh Bong, General Director of Karl Gross Logistics Vietnam, said that at the time of the pandemic last year, due to the reduction of global consumption, shipping lines together cut supply by canceling flights, in the industry. called “blank sailing”.
This causes a sudden decrease in total carrying capacity. More than 400 trains were canceled at the epidemic stage, which means 10% of annual volume was cut. But this year, when the pandemic was under control thanks to immunization programs, world consumption demand increased again.
Some places continue to have social gaps – like France just announced its 3rd blockade, Germany and Italy impose partial restrictions on activities – causing cash flow from entertainment to continue to be spent. use. “These factors lead to high demand for transportation, demand exceeds supply, so higher freight rates are inevitable,” said Ms. Bong.
Monday, the chain consequence is the bottleneck appearing in a series of major ports around the world. Containers poured into those spots but could not be handled in time. Sheet Nikkei According to the report, the volume of containers handled at the ports of Los Angeles and Long Beach (California, USA), the gateway to import goods from Asia, increased 45% in February compared to the same period last year, and increased by month. eighth in a row.
The slow release of the cargo makes the shortage of containers worse and increases the freight charge accordingly. Starting prices for freight from China to the West Bank are up 250% year-on-year. Transport costs from Europe to the West Bank have nearly doubled.
In Lianyungang – China’s 10th busiest port, the cost of shipping a 40-foot container to the US has soared to more than $ 10,000, from the usual $ 2,000-3,000. As a result of the fact that since the end of 2020, cargo ships have piled up outside overcrowded Western ports, prompting Asian exporters to demand return of empty containers for further shipments, according to AFP.
Ms. Bong said, some shipping lines do not even accept exported goods, because the foreign side has a lot of empty containers. They wait to finish handling those empty containers before they can move on. “Where you need it, you don’t have it, and where you don’t need it, there are plenty of containers. This imbalance phenomenon will greatly affect Vietnamese exporters, ”she said.
Tuesday, is the shipping lines’ container mobilization strategy. A representative of a logistics company asked to be anonymous said that the export volume increased sharply from Asian countries, so last quarter, companies prioritized moving empty containers to markets where profitability on these routes was better. China, especially. But the good news is that the current container rates have decreased, so this situation is less worrisome.
Therefore, exporters are facing the problem of high freight rates, but when you agree to pay high prices, it is not certain that there are empty containers for packing. Or even though the cargo has been packed into the container or brought to the port, the cargo may not be delivered on schedule due to the lack of slots at the last time due to the full load of the vessel or when the cargo arrives at the transshipment port. be transshipped to make room for another shipment. Duy Tan Plastic side is an example of this experience.
One package was imported to CMIT port, belonging to Cai Mep – Thi Vai port cluster in March. Photo: Karl Gross.
Logistics businesses said that the shortage of containers is still very large, so it also takes time to get back to normal. Even the freight rates in April are being affected by the recent congestion of the Suez Canal. Depending on the route and the region, the price per container to Europe will increase by 200-300 USD. “I predict the fastest is the end of the third quarter, not later than the Lunar New Year when the translation of Covid controlled by other countries will return to normal”, a representative of one enterprise said.
Ms. Bong said that, unable to optimize costs at this time, exporters should check prices and book containers 2-3 weeks or even a month before the train runs. . “Businesses should negotiate with partners to share the rate increase. At present, the shipping company is still the operator of the game that both buyers and sellers have to do their best to participate in that race, ”she said.
Mr. Le Anh said that shipping lines and logistics companies need to update more frequently on the situation of booking and freight so that businesses can understand the situation and inform customers. He said that it is also necessary to intervene at the macro level to be able to improve the situation, avoid scarcity and rising freight rates.
Currently, the only tool that is considered to manage freight rates and surcharges applicable to foreign shipping companies in Vietnam is only Decree 146/2016 of the Government, which regulates the listing of prices and surcharges in addition to prices. container freight services by sea, service charges at seaports.
When freight rates skyrocketed at the beginning of the year, the Maritime Administration said it had coordinated with relevant associations to review the process of applying freight rates and surcharges of foreign shipping lines in Vietnam. Failure to report the rate increase to the competent authority will be handled according to Decree 142/2017 on penalties for administrative violations in the maritime sector.
The highest fine level is 5 million VND for failure to notify in writing the increase or decrease adjusted price to the competent state agency in some cases.
“It is known that shipping lines currently register freight rates with the Ministry of Finance. We expect the Ministry to disclose information so that businesses can know and check ”, Mr. Le Anh said.
According to VnExpress.net
