Minh Phu Seafood has seen its export value growth slow amid recent falling shipping costs.
Minh Phu, Vietnam’s leading shrimp producer, exported shrimp worth USD 388 million (EUR 381 million) in the first seven months of 2022, up 5 percent year-on-year. But July's sales total dragged that figure down from the 15 percent growth it achieved in the first half of 2021.
The company's growth slowed despite freight rates falling dramatically recently due to a decline in global trade, Minh Phu CEO Le Van Quang said. The cost to ship a container of frozen products to Los Angeles, California, U.S.A. was USD 7,340 (EUR 7,207) in early August, down from USD 8,090 (EUR 7,944) in the second half of July, and down sharply from more than USD 14,000 (EUR 13,747) in January.
Shipping rates from Vietnam to New York declined to just over USD 11,000 (EUR 10,779) in July, from roughly USD 16,000 (EUR 15,680) in January; and the rate to ship to the E.U. dropped to just under USD 8,900 (EUR 8,722) in July, from more than USD 11,800 (EUR 11,565) in January this year.
The decline in Minh Phu’s sales confirmed Quang’s previous forecasts about a difficult second half for Minh Phu, which prompted it to move away from the U.S. market and focus more on Japan and other alternative markets.
Sales to the U.S., the largest buyer of Minh Phu's shrimp in 2021, continued to drop and were valued at USD 63.8 million (EUR 62.6 million) in the period spanning January to July 2022, down 43 percent from the same period of 2021.
As a result, Japan took over the top spot on Minh Phu's export list, purchasing products worth nearly USD 94 million (EUR 92.3 million), up 23 percent year-on-year, between January and July 2022.
Minh Phu’s sales to the E.U. rose by 38 percent year-on-year to USD 62.7 million (EUR 61.5 million) while the value of its exports to Canada reached USD 55 million (EUR 54 million), up 50 percent year-on-year.
In March 2022, Minh Phu said it has suspended shrimp exports to Russia after the company encountered issues in its financial transactions with its Russian trading partners. Quang said the firm's exports to Russia have since resumed but payment issues remain, resulting in the export value shrinking 52 percent year-on-year to USD 7 million (EUR 6.9 million) in the first seven months of 2022.
Although China has eased some COVID-related restrictions for imported frozen seafood cargoes from Vietnam, the country has dropped in Minh Phu's country-by-country sales rankings. According to Quang, Minh Phu's exports to China have beeen cut as a result of the continuance of strict regulations in China that require the thorough inspection of imported goods to prevent further COVID-19 outbreaks.
“This has made costs increase and caused delays in delivery,” Quang said.
Nevertheless, Quang said Minh Phu can’t currently meet demand from various Chinese buyers, who are keen to purchase low-price shrimp from Vietnam and to buy via cross-border transportation, which is normally preferred by smaller companies.
Photo courtesy of Toan Dao/SeafoodSource
