How to deal with escalating import-export costs?

Container shipping costs will rise by 20%.

Mr. Johnathan Hanh Nguyen, Chairman of the Inter-Pacific Group (IPPG), stated that rising shipping costs and global oil prices have had a significant impact on businesses' import and export activity.

"The cost of air freight from Vietnam to the United States has risen by 10 times from 1.8 USD/kg to 18 USD/kg at the moment. The more enterprises export, the more they lose", Mr. Johnathan Hanh Nguyen stated.

Many other import-export businesses have also noted that their operation expenses have been pushed up, causing Vietnamese goods' competitiveness to plummet. To maintain business relationships with their consumers, many export firms incur breakeven or even losses to export goods. Meanwhile, numerous shipping companies indicated that container shipping costs will rise by 20%, despite the fact that these rates were already extremely expensive.

Mr. Tran Viet Huy, Head of the Vietnam Logistics Business Association's (VLA) Customs and Trade Facilitation Department, agreed that the COVID-19 epidemic had a significant influence on global economy, disturbing the global supply chain, including logistics.

"Costs of epidemic prevention and reduced labor productivity (due to quarantine leave); model changeover costs; and increases in raw material and fuel prices have all had an impact on firms' import and export activity. Logistics costs, international freights, and warehouse prices are seeing a big increase," Mr. Huy said.

Mr. Dao Duy Tam, Deputy Director of the General Department of Customs' Customs Supervision and Administration Department, noted that charges for import-export are driven by rising gasoline prices, the COVID-19 outbreak, overlapping management, and legal documents that aren't true to the facts. Furthermore, businesses are uninformed, have not adjusted their contract signing procedures, and are not taking full advantage of free trade agreements.

To assist businesses, the General Department of Customs will continue to push customs clearance digitization and administrative reform in order to reduce the time it takes for goods to clear customs at the border.

"The customs authorities themselves recognized that there are still some challenges in putting processes in place at the local level. Some customs authorities' ability to handle processes remained limit ed. Besides, the businesses' understanding of customs procedures and related rules is still hazy, so they have experienced bottlenecks in customs clearance", Mr. Tam stated.

The Ho Chi Minh City Customs Department is working on a project called "Trade Facilitation: Customs processes in logistics and anti-jamming of exported goods at Cat Lai port," according to Mr. Dang Thai Thien, Deputy Head of the Management Supervision Department. The purpose of this project is to cut customs clearance time in half and physical inspection time in half at Cat Lai port.

It is largely expected the said efforts of the General Department of Customs will contribute to reducing import-export costs for businesses.