Businesses are worried international freight rates will continue to increase

The increase in shipping fees at this difficult time will cause businesses to have difficulties to pile up. Photo: T.H

Enterprises worried

Having only exported a few shipments, reducing the amount of inventory in stock, said Tong Van Vinh, Chairman of the Board of Directors of Ngu Lam Viet Trading Production Co., Ltd - specialising in the production of wood products for export to the US and Europe. Currently, the freight for export goods from HCM City to the US and Europe is still anchored at a high level of US$10,000-12,000 per container.

"Firms have been informed that container freight rates will increase in July, but it is not known how much the increase will be. Currently, production of firms is still very difficult, input costs increase, while export prices do not know, the increase in freight rates will make businesses even more difficult," Thien said.

According to Ho Quoc Luc, Chairman of the Board of Directors of Sao Ta Food Joint Stock Company, the cost of refrigerated containers has increased. This salty taste made Sao Ta lose a lot of money, the result of thousands of labourers suddenly disappeared and disappeared because of the "trick" of international shipping lines.

In the second quarter, additional transportation costs and other risks were revealed such as increased costs of packaging materials, increased labour costs, and the price of raw shrimp also increased, making Sao Ta operations slightly adjusted. At the same time, the unfavourable Covid-19 developments, the fourt outbreak with the risky new Delta and Delta Plus variants, cost Sao Ta a lot of resources for pandemic prevention solutions. In the past five and a half years, the export processing sector of the firm has been a bit stranded, mainly due to the rising freight rates.

Not only are import-export businesses concerned, logistics service businesses are also standing still when they know that freight rates will go up. Le Duy Hiep, Chairman of the Association of Logistics Service Enterprises, said the difficulty of the lack of containers at the present time is much better than at the beginning of 2021. Although it is still difficult to hire a container to export goods, it has become easier as the shipping company has improved a lot.

However, now businesses face rising international transportation costs and are expected to continue to rise in the near future.

"This is a great difficulty for businesses in the current difficult period, when businesses have had to bear the cost of transportation continuously increasing in the past time, now it is forecast to increase further," Le Duy Hiep said.

According to experts, the cost of transporting goods by container has increased dramatically in recent years as demand is exceedingly high compared to the number of 20-foot and 40-foot containers responsible for the main transport in global trade. When consumers in many developed economies are promoting their consumption of goods again, businesses buy and collect raw materials for production, a series of adverse developments in the global shipping industry have led to an escalation in transportation costs.

Business support

To support businesses in the current difficult period, the management agencies have taken many practical solutions. Recently, at the first meeting on June 25, the People's Council of HCM City passed a resolution to delay the collection of fees for the use of works, infrastructure, service works and public utilities at the seaport until 0:00 on October 1, 2021 (three months back from the previous resolution).

According to calculations by the People's Committee of HCM City, if the fee is collected in three months (from July 1 to October 1, 2021), the collected fee will be 723 billion VND. If not collected in these three months, this expected revenue will be considered as a support for production, business, import and export firms, ensuring the implementation of the "dual goal" of pandemic prevention and socioeconomic development.

Previously, in the face of the situation of freight rates, the Maritime Administration sent requests for container shipping lines to be transparent in freight rates according to Decree No. 146/2016/ND-CP stipulating the listing of prices, off-price surcharges of container shipping services by sea and service prices at seaports.

Specifically, shipping lines were told to make full listing of information on: departure and destination points of transport routes; the list and rates of shipping services by sea, surcharges corresponding to the shipping route and type of goods transported. The listed price includes the related service price incurred and taxes, fees and charges and information of shipping firms or agents and firms authorised to list.

In case of changes in the direction of an increase in the price of shipping by sea, an increase in the posted surcharge, the effective date of the shipping price by sea or surcharge specified by the firm, but not earlier than 15 consecutive days from change listing date.

At the same time, the inspection team included representatives of the Ministry of Transport, the Vietnam Maritime Administration; Department of Import and Export, Department of Competition and Consumer Protection (Ministry of Industry and Trade); the Price Management Department (Ministry of Finance) has inspected 12 shipping lines and representatives of shipping lines on their implementation of the law on freight rates, off-price surcharges and issues related to shipping services container by sea.