Profits of seaport exporters grow

	Overcoming obstacles to reduce logistics costs
	HCM Customs controls imports and exports across seaports
	First northern seaport handles 1 million TEUs of goods in a year

Shrimp exports recorded a growth of 4% in 2021. Photo: Internet.

Profits in 2021 grow positively

In 2021, the seafood value chain was disrupted, seriously affecting the supply and logistics of the seafood industry, while the demand has gradually increased in major markets such as the US and EU due to the reopening of restaurants and hotels.

Social distancing measures in Vietnam in the third quarter of 2021 had an impact on the small-scale seafood industry and caused labor shortages for companies. Producers are confronted with inflationary cost pressures, including in raw materials and animal feed.

In addition, most exporters (especially those in Asia) suffered from an increase in costs due to lack of containers, rising container freight rates and prolonged congestion at seaports.

Despite these difficulties, Vietnam’s seaport exports still achieved positive results. According to the Vietnam Association of Seafood Exporters and Producers (VASEP), Vietnam's seafood export turnover in 2021 saw a year-on-year increase of 6% to US$8.9 billion. Tra fish exports rose 10% to US$1.6 billion and shrimp exports grew 4% to US$3.88 billion.

According to the consolidated financial statements of the fourth quarter of 2021 of Ben Tre Seafood Import-Export Company (Aquatex Ben Tre), the revenue surged 69% to VND131 billion compared with the same period in the previous year.

Resulting from the low cost price, the gross profit increased 3.4 times to VND33.5 billion year-on-year. After deducting expenses, the net profit of Aquatex Ben Tre recorded VND14.8 billion while it only reached VND1.5 billion in the same period of 2020.

According to Mr. Phan Huu Tai, General Director of Aquatex Ben Tre, the surge in profit was because the company improved many stages of production, which reduced product prices, while selling prices increased compared with the same period last year.

Thanks to the positive results in the fourth quarter of 2021, Aquatex Ben Tre's full-year profit rose 134 % year-on-year to about VND34 billion.

Vinh Hoan Seafood Joint Stock Company also announced its consolidated financial statements for the fourth quarter of 2021. The company’ revenue grew 39% to VND2,693 billion and gross profit increased 166% to VND639 billion thanks to the decrease in cost price. According to the company, the increase in both output and selling price has boosted profit growth.

As a result, the company recorded a profit after tax that rose 175% to VND461 billion in the fourth quarter of 2021 and accumulated profit for the whole year increased 54% to VND1,110 billion.

Cuu Long An Giang Seafood Import and Export Joint Stock Company also recorded a net revenue of VND1,213 billion, up 27%, and net profit of VND43 billion, up 51% compared with 2020.

Positive recovery

Regarding the prospects of the seafood industry in 2022, VCBS Securities Company said that seaport export prices will increase thanks to the prospect of exports from major markets. The major markets are recovering thanks to widespread vaccination coverage and the execution of post-Covid support packages.

Besides, the price of raw materials in producing countries all increased, boosting export prices; restaurants and hotels gradually resumed operations and the demand for processed foods continues to increase after the pandemic.

The seafood industry has great potential from new FTAs ​​such as the EVFTA and CPTPP. The EU is Vietnam's third-largest seafood export market, followed by the US and Japan. This market always accounts for over 17-18% of Vietnam's total seafood export value. Of which, exports of shrimp, pangasius, seafood products to the EU accounts for 22%, 11%, 30-35%, respectively.

According to the EVFTA, about 220 tax lines for aquatic products have a base tax rate of 0-22%; in which most high taxes from 6-22% will be reduced to 0% as soon as the agreement comes into effect, the remaining tax lines will be reduced to 0% according to the 3-7 year roadmap.

In addition, the RCEP agreement, which took effect on January 1, 2022, is also expected to create a boost for seafood exports, especially to the markets of Japan, Korea, and Australia.

SSI Research also expects that the demand in the EU and China will recover due to two consecutive years of low levels, thanks to the EVFTA and the relaxation of seafood restrictions at Chinese ports. Accordingly, the recovery of demand will help the average selling price continue to rise.

However, as observed by SSI Research, the price of raw fish increased by 13% over the same period and 8% compared with the previous quarter due to the shortage in supply and the decrease in the farming area when applying social distancing measures in the third quarter of 2021.

AgroMonitor data shows that pangasius supply decreased 14% year-on-year in November-May 2021. According to VASEP, the pangasius farming area dropped by 30-50% compared with the same period of the previous year, leading to supply shortages in the first quarter of 2022.

This will raise cost of raw fish and may reduce the profit margin of producers in the first quarter of 2022 as it is difficult to fully convert to the average selling price. Since the pangasius farming cycle is 6 months and the price of raw fish has increased, the supply shortage will gradually decrease in the second quarter of 2022.

Experts of Rong Viet Securities Company also said that the decrease in freight costs will be a positive factor to improve the profits of companies and boost exports to markets with high transportation costs such as Europe. According to the World Composite Index, freight costs began to decline in November 2021 after peaking in September and October 2021.

As the high cost becomes acceptable at the “new normal”, major companies will negotiate with shipping lines to reduce logistics costs by transferring the contract from CIF to FOB. Large companies such as Vinh Hoan have implemented this operation.

As the high cost becomes acceptable at the “new normal”, major companies with extensive experience in working with shipping lines, will be capable of negotiating to reduce logistics costs by transferring the contract from CIF to FOB, Vinh Hoan company as an example.