The Vietnam Association of Seafood Exporters and Producers (VASEP) has complained in a letter sent to Vietnam’s Ministry of Agriculture and Rural Development that the rising shipping costs and container shortage are hampering the export activities of the country’s seafood companies.
Freight costs have skyrocketed since November 2020 due to a pick-up in global commerce, a severe shortage of containers, delays caused by heightened food safety inspections in China and augmented safety protocols around the world, and rising fuel prices. This has forced Vietnamese companies to compete against each other to secure what limited availability there is onboard container ships traveling to major markets like the United States, according to VASEP’s 30 June letter. Shipping costs from Vietnam to many global ports have risen between 200 and 1,000 percent – and that’s when there’s any availability at all, VASEP reported.
The cost for a container for frozen products to the port of Southampton, in the United Kingdom, hit USD 9,100 (EUR 7,680) in May, up from USD 5,000 (EUR 4,222) in December 2020 and USD 1,600 (EUR 1,351) in early 2020.
The rate for shipping to Los Angeles, California, U.S.A. surged to USD 8,000 (EUR 6,755) per container in May, from USD 4,000 (EUR 3,378) per container in December 2020 and USD 1,800 (EUR 1,520) per container in the pre-COVID months of last year.
Complicating matters further, in November 2020, many carriers began raising their fees for so-called “emergency rate restoration” – a surcharge for sudden increases in shipping costs faced by the cargo companies – by between USD 50 and USD 200 (EUR 42 and EUR 169) per container for shipments from Vietnam to ports in other countries in Asia.
On 12 January, the Vietnam Maritime Administration (VMA), under the Ministry of Transport; and the Department of Import and Export, under the Ministry of Industry and Trade, held a meeting with exporters and foreign carriers to look for ways to address the issue.
Since then, however, shipping costs have continued to increase and a shortage of containers remained acute as of May, VASEP reported. Many export contracts have been canceled or postponed because of the rising freight rates and container shortage, severely affecting seafood exporters from Vietnam, VASEP said.
Minh Phu Seafood, a top shrimp exporter from Vietnam and a VASEP member, said last month additional shipping costs and the container shortage will affect its profitability this year.
According to VASEP, Vietnamese exporters have been able to secure shipping berths contingent upon paying higher shipping costs. Based upon that information, VASEP said it suspects containers and spaces on ships have been hoarded by shipping companies as a strategy to increase profits. VASEP said the price hikes are unreasonable because carriers had sufficient time from the fourth quarter of last year – when the problem was first widely reported – to supply themselves with enough containers to address the shortfall.
“Without control measures, this situation will persist, with shipping costs continuing to rise and container shortage remaining a concern,” VASEP said.
Photo courtesy of Avigator Fortuner/Shutterstock
