The burden of transportation and container rental costs are weighing heavily on businesses

Transportation and container rental costs are a problem for businesses. Photo: T.H

The highest shipping rates of all time

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), results from a survey by MNSC (Malaysia) at the end of 2021 show that sea freight is at an all-time high, and has increased from 100% to 700% of pre-pandemic levels. Especially, sea freight rates in some routes have increased by 800%, up 100% over the same period in 2020.

As quoted by the Freightos freight index, charter rates per 40-foot container remain near all-time highs on global shipping lanes. Even if fares for some European routes such as Rotterdam, Hamburg tend to drop a little from last year's record high, it is still a high price. Up to now, sea freight rates between Asia and Europe have remained high because of the reduced capacity of shipping lines and lack of containers.

According to Ms. Ta Ha, catfish market expert of VASEP, the reflections of some seafood export enterprises show that currently, sea freight rates are even higher than the peak of last year. The more difficult thing is the placement of containers whose cost depends on each route and each airline.

As a matter of fact, many containers have been manufactured for nearly two months before they can rent containers to export goods, therefore, booking a place to ship for businesses is even better than signing an order for new products.

According to businesses, currently, freight rates for Asian routes such as Thailand (Bangkok port, Laem Chabang) 1,600 - 2,500 USD/container, depending on the carrier, Philippines (Davao, Cebu, General Santos) ranging from 4,000 - 5,300 USD/ containers; going to West Coast ports ranges from 12,000 - 14,000 USD/container (depending on the carrier); going to the East Coast such as (Baltimore, Miami, New Orleans, Houston) fluctuates at a high level of 19,000 - 22,000 USD/container (depending on the carrier), moreover, this route is very difficult to book because this port has few shipping lines accepting shipping, not to mention the fact that there are months when trips are cut and there is a big price difference of even thousands of dollars between shipping lines.

Chain of difficulties in transporting goods

According to Ms. Ta Ha, the situation of canceling the trip is continuous, especially just a few days before towing the container, the shipping agent will notify the owner of the goods that the goods are out or lack containers so that the exporter has to find other parties with the freight rate which is already specified or raised. This phenomenon of "price-fixing" or deliberately "hooking goods" causes shippers to be forced to "pickpocket" to pay other parties, sometimes up to thousands of dollars, to get a reservation.

As a result, businesses are always in a state of anxiety because of missing flights, shippers still have to queue to book spots, even now they have to wait until the ship's departure date to get empty containers. Port jams, constant delays of train schedules, jams of goods pulled into the port are now common.

Besides, booking a spot successfully is not certain that there is a container for them. Even having a container is unlikely to be able to lower the container.

Furthermore, due to the increase in gasoline prices in recent years, so from road to sea, transport businesses are all preparing to raise new prices. Namely, Saigon Newport Corporation has just announced that due to the continuous increase in gasoline prices, fuel input costs, transportation charges, handling charges at ports and ICD have all increased, so the unit also adjusted the price of transportation services of transporting containers via road and waterway back and forth between Cat Lai - Hiep Phuoc port, Dong Nai port and associated ICDs with an increase of 10 - 30% compared to the unit price maintained from 2019 from January 1.

Speaking more about this issue, Ms. Ta Ha said the logistics costs that Vietnamese exporters have to bear are exceeding the limit  because they cannot control the ceiling.

There are many reasons given by shipping lines for the increase in freight rates, such as the consequences of more than two years of the Covid-19 pandemic leading to chaos in the container supply chain, lack of manpower and containers in shipping lines while ocean freight is recovering. Remarkably, the military conflict in Ukraine - a country in the relationship between Europe and Asia weighs heavily on sea traffic between the two continents.