'Caught sick' the reason why shipping rates are increasing day by day
Container
shipping costs have increased almost vertically, causing export
businesses to worry about delivery schedules as well as shrinking profit
margins.
Freight costs increased dramatically
Mr.
Vincent Clerc - CEO of shipping giant Maersk (Denmark) - said that
container shipping costs increased 'almost vertically' in the past
month. Specifically, in the week ending June 6, Drewry's container
freight index increased 12% to 4,716 USD per FEU (40ft container), an
increase of 181% over the same period and 232% higher than the previous
year. average level in 2019.
For
example, freight rates on the Shanghai to Genoa route reached $6,664
per FEU, up 213% from a year ago. Additionally, freight rates on the
Shanghai to New York route recently reached $6,463 per FEU, up about
142% over the same period, while rates on the Shanghai to Los Angeles
route recently reached $5,975 per FEU, up about 215% over the same
period last year.
According
to Vietnam Maritime Administration, statistics from the beginning of
June 2024, the price of shipping container goods by sea to European
countries and the United States is trending up sharply, the world
container index increased by 12% to 4,716. USD/40 feet container in the
past week.
According
to data from the international logistics exchange Phaata, freight rates
for the City route. Ho Chi Minh trips to the United States are
increasing sharply. Meanwhile, Drewry's world container index (WCI)
increased 12% to $4,716 per 40-foot container in the week from May 30 to
June 6 and increased 181% over the same period last year. From Shanghai
to Genoa, rates increased 17% at $6,664 per 40-foot container. Freight
rates from Shanghai to New York increased 6% to $7,214 per 40-foot
container.
Mr.
Truong Dinh Hoe - General Secretary of the Vietnam Association of
Seafood Exporters and Producers (VASEP) - informed that the world's
vital shipping routes from the Red Sea to the Gulf of Aden are heavily
affected by conflict. Geopolitics are escalating in the Middle East. For
some time now, the Mandab Strait - one of the busiest maritime routes
in the world with the capacity to handle about 15% of global maritime
trade value - has been significantly disrupted due to attacks by Houthi
rebels. on cargo ships in recent times. The majority of cargo ships
still avoid moving into the Red Sea area, with the number of daily
movements down by two-thirds compared to the same period last year.
Drought
conditions in the Panama Canal – which handles 5% of global maritime
trade – have gradually improved as the number of daily transits has
increased. However, shipping capacity through the Panama Canal is still
lower than the usual daily average of 34 - 40 transits and cargo traffic
is expected to return by 2025. Recently, a situation occurred again.
Congestion in Singapore leads to concerns about supply chain crises and
rising commodity prices.
"Congestion
in Singapore stems from many factors, from the tendency to change
shipping routes when the Red Sea is unstable to the rush to transport
goods before the new tariffs imposed by the United States on Chinese
goods take effect." , Mr. Truong Dinh Hoe shared.
Many
leading industry experts say that the United States plans to impose
strong tariffs on many types of Chinese goods from August 2024, causing
Chinese exporters to boost exports ahead of schedule. Therefore, many
Chinese exporters are paying higher prices to shipping lines to ensure
space on ships bound for the United States and Europe.
Chinese
businesses are willing to pay up to 1,000 USD for 1 slot on the ship,
while Vietnam only pays 600 USD. Therefore, shipping lines have almost
given priority to China, reducing trips with countries including
Vietnam, leading to the current situation of huge price increases.
Mr.
Do Ngoc Tai - General Director of Tai Kim Anh Seafood Processing Joint
Stock Company - informed that shipping rates have increased dramatically
by 40% since May due to the war in the Middle East and China collecting
empty containers to reserve for export. for the United States before
the new tax deadline. Similarly, with the EU market, shipping rates
increased dramatically by 60% due to detours and China collecting empty
containers for export to the United States.
In
the pepper and spice industry, Ms. Hoang Thi Lien - President of the
Vietnam Pepper and Spice Association - informed that pepper export
businesses are facing difficulties when pepper prices increase. Unable
to buy goods, along with that, transportation costs increase. The reason
may be because the Chinese side collects empty containers for export.
Narrowing business profit margins
Some
export businesses reported that the cost of a container to the US
market has increased from nearly 3,000 USD to nearly 7,400 USD; Peak
season fees every year are the highest at about 300 USD/container, now
the shipping company reported an increase to 1,000 USD/container...
Shipping rates fluctuate every day. Shipping companies also quote prices
weekly instead of 15 - 30 days as before.
Meanwhile,
Vietnamese businesses have almost no choice because in terms of
international shipping, Vietnam's shipping fleet is currently only
responsible for transporting about 10% of the market share, mainly
transporting the following routes: China, Japan, Korea and Southeast
Asia. Vietnam's export activities to major markets such as the United
States, EU... depend on foreign shipping lines.
Notably,
according to Mr. Vincent Clerc, with the above sharp increase in
prices, it may motivate more retailers in the West to find ways to
transport goods for the Christmas shopping season in large volumes.
earlier and earlier than usual. This could put additional pressure on
the global supply chain. The sooner retailers replenish inventory, the
more they will fall into a dilemma. The more they try to request early
shipments to avoid late delivery, the more delays they see.
Mr.
Nguyen Hoai Nam - Deputy General Secretary of VASEP - said that
shipping costs are increasing again, causing difficulties for the
fisheries industry. Because businesses in the industry mainly operate
export activities, each year they use more than 1 million containers,
but currently, it is very difficult to order containers.
Meanwhile,
Mr. Ho Quoc Luc - Chairman of the Board of Directors of Sao Ta Food
Joint Stock Company - said that sea freight rates to North America and
Western Europe increased by 100% compared to the off-peak period, while
other routes Going to Japan, Korea, Australia has more stable prices.
Increasing fares will reduce business profits.
Faced
with the above situation, the Vietnam Maritime Administration has just
requested the Maritime Port Authorities to coordinate with the Maritime
Sub-Departments and relevant authorities, associations and units to
strengthen supervision of business enterprises. sea transport,
providing container freight services by sea, listing prices and
surcharges in addition to the price of container freight services by sea
(prices and surcharges in addition to prices); Complying with the
effectiveness of price postings and surcharges in addition to prices
according to the provisions of Decree No. 146 of the Government.
Units
are assigned to monitor and report to the Department when there is
congestion at seaports, as well as when there is an imbalance in
container containers serving import and export goods.
Vietnam
Maritime Branch in City. Ho Chi Minh was assigned to preside over and
coordinate with the Maritime Branch in Hai Phong and the Maritime Port
Authorities in the city. Ho Chi Minh, Vung Tau, Hai Phong monitor
statistics on price increases/decreases and surcharges in addition to
prices for a number of shipping lines that provide container shipping
services to Europe and the United States, including including: Maersk,
MSC, CMA-CGM, ONE, Hapag-Lloyd, Evergreen, HMM, COSCO, Yang Ming,
OOCL...
At
the same time, proactively work with representatives of the above
shipping lines in Vietnam and relevant units to grasp the causes of
service price increases/decreases when there are signs of sharp
increases/decreases and other related issues. to the shipping company.
According to Congthuong.vn
Posts
