VCN – Exporters, especially those of frozen goods, have struggled over the past year because of the increase in the price of empty containers.
|Transport costs are having a strong impact on export shipments. Photo: T.H|
At the beginning of this year, shipping agents said that the freight rates had not improved and continue to increase.
Initially, prices on long routes such as to North America and the EU increased rapidly. In mid-2021, this situation spread to routes such as Australia, Japan, and South Korea.
According to Ho Quoc Luc, former Chairman of the Vietnam Association of Seafood Exporters and Producers, Chairman of the Board of Directors of FIMEX, at the beginning of the year, there were reports that a Danish shipping company made a huge profit in 2021, about US$15 billion. On the Vietnamese stock exchange, it was also busy because the shares of shipping companies also grew, mainly thanks to high profits.
Vietnamese seafood processing enterprises have been disadvantaged because the US, EU, and UK are the leading seafood markets of Vietnam, these are long-distance markets with increased freight rates 4-6 times compared to normal.
Other costs in 2021 were also not low such as the cost of disease prevention and control, increased costs due to reduced productivity, the cost of imported materials increased by 10-30%.
Seafood entrepreneurs expect a miracle in 2022 such as the easing of the Covid-19 situation, but this expectation did not come from the end of 2021 when a new variant of Covid-19 broke out and China’s “Zero Covid” policy caused more confusion in the global logistics system, causing the cost of short shipping routes to increase, and at the same time, this situation contributed to local shortages of goods in import markets, and indirectly contributed to energy inflation.
According to Mr. Ho Quoc Luc’s analysis, seafood enterprises entered 2022 with great joy because they entered the recovery period after the pandemic. However, at the beginning of the year, shipping agents said that the freight rates had not improved but continued to increase.
When the seafood industry is in the process of recovering and promoting the value chain of shrimp and fish, input materials are all increasing prices. Shrimp breeders increased by 5-7% while fish breeders increased strongly by 25-30%; Fish feed increased slightly but shrimp feed increased over 5%.
More ominous is that some chemicals increased by as much as 20-30%. In general, all inputs and labor costs to form fish and shrimp products have increased. Increasing costs at each link of the shrimp and fish value chain will lead to a significant increase in the cost of final products in processing enterprises.
Prices increase and freight rates make enterprises sell at higher prices, but consumers are not sure to accept this.
A part of consumers with lower incomes inevitably must switch to buying alternative foods or from other countries with lower prices being suitable for their pockets.
The government attaches great importance to keeping the exchange rate stable.
The situation of low exchange rate volatility has advantages for the Government, but it will obviously make it difficult for our export prices to compete with other countries, leading to the loss of customers and market.
“I think, when VASEP is monitoring this situation, it should have a document to present the situation to relevant ministries and branches for consideration and support,” Mr. Luc said.
In 2021, when shipping lines increase freight rates many times, even 10 times, causing seafood export enterprises to face difficulties and very high costs, seafood enterprises had proposed to the Ministry of Agriculture and Rural Development to call for “help” to the Prime Minister.
According to seafood export enterprises, shipping lines have announced to increase freight rates from 2 to 10 times (depending on the route and shipping line), while it is still difficult or impossible for enterprises to book containers, causing sudden difficulties, congestion and very high costs for Vietnam’s seafood export industry in particular and export industries in general.
By Le Thu/ Binh Minh