Exporters in Vietnam are having a difficult time dealing with high sea freight rates. They have to recalculate their costs and accept losses in order to retain customers.

Data from Phaata (an international logistics exchange) showed that freight rates between Ho Chi Minh City and the U.S. were increasing rapidly. Drewry’s World Container Index (WCI) rose 12% to $4 716 per 40-foot box in the week of May 30 to June 6. This represents an 181% increase over the same time last year.

The rates have increased by 17%, to $6,664 for a 40-foot container between Shanghai and Genoa, and $7,214 between Shanghai and New York.

Rerouting ships from the Red Sea to the Cape of Good Hope caused a shortage of capacity, increased congestion in ports, and an increase in demand. This is also what’s driving the sudden rise in spot rates along the main routes. There is also an imbalance in the number of containers used for exports and imports.

Experts in the industry have stated that the U.S. plans to impose high tariffs on a variety of Chinese products, including electric vehicles, batteries, and solar cells, starting August. This has prompted Chinese exporters to ship ahead of schedule.

Many Chinese exporters pay higher rates to shipping companies to earn slots on ships heading to the U.S.A. and Europe. They are willing to spend up to $1,000 per one, whereas exporters from Vietnam only pay $600. Shipping lines have prioritized China and reduced trips to other countries, such as Vietnam, resulting in the current rate hikes.

Businesses in difficulties

Normal shipping from Vietnam to Europe or America via the Suez Canal takes 40 days. Due to tensions, the shipping time for one-way shipments has increased from 40 to 60 days. This has resulted in an increase of $1,000 to $3,000 per container.

According to him, long delivery times will cause many businesses to lose money, and this will affect the shipping of goods into other regions around the world, such as Asia or Africa.

Vietnam’s main exports are to the E.U. Textiles, footwear, wooden furnishings, electronics, and electronic products will be the most affected. Many businesses in Vietnam deliver goods as free on board (FOB), so the impact will not be so severe.

“The logistics industry is experiencing a slight effect, but other industries are at risk of order disruptions if the situation does not get resolved,” he said.

Nguyen Hai Nam, vice secretary general of the Vietnam Association of Seafood Exporters and Producers, also shared the same opinion. He said that the rising shipping rates were causing problems for the seafood industry, as the majority of businesses operate mainly in export activities and use more than one million containers every year. Currently, it is difficult to order containers.

Phuc Sinh – a major coffee and pepper exporter from Vietnam – said that shipping companies now list prices every week instead of every 15-30 days like before. This can cause businesses to incur higher shipping costs or even lose money. Some businesses have been forced to switch to air shipping at very high rates.

According to the Vietnam Maritime Administration (VMA), since the beginning June 2024, rates for shipping containers into European countries and to the U.S. are on the rise. The world container index has risen 12% in the last week to $4,716 for a 40-foot container.

To deal with this situation, the administration asked that port authorities coordinate with maritime sub-departments at provincial level, associations and units, as well as relevant authorities and authorities, to strengthen the supervision of shipping companies providing container freight service in listing rates and surcharges.