The maritime industry is struggling with the consequences of rising sea freight costs that are affecting global trade. Viet Nam Maritime Administration has issued a call for action, urging steps to mitigate the adverse impacts on imports and exported. The cost increases are due to a variety of factors including increased demand, geopolitical disruptions and logistical challenges.
Vinamarine data shows a worrying trend. Global container shipping fees are up 12%. Routes from Asia to Europe have seen increases of 11-14%. The increase in international container rates is more than 70% higher compared to last year’s same period and over 110% above pre-pandemic levels. Sea freight rates are set to reach levels similar to the COVID-19 peak due to the Red Sea conflicts, a lack of empty containers and surging transportation demand.
Previously, freight quotes were provided for 15-30 day periods, but they are now only available for a week. This reflects the rapid and unpredictable changes that have occurred in the market. Although the current rates are double what they were in recent months, the prices are still five-times lower than the unheard of highs during the pandemic.
The increase in freight costs is disproportionately felt by small and medium-sized businesses (SMEs), especially those that rely heavily on short-term charter agreements. In Vietnam, SMEs are the majority of business. The impact is significant. Long suggested that Vietnamese charterers collaborate to consolidate their goods, thereby increasing their bargaining strength with carriers. This collective approach may lead to better negotiation outcomes.
In response to an escalating crisis the Ministry of Transport has instructed Vinamarine that it will work with port companies, associations and shipping lines to identify problems and propose solutions. To ease the financial burden of businesses, the Ministry of Transport is considering measures to improve the supervision of port fees and surcharges.
Priority is also given to efforts to prevent congestion in ports, ensure the availability and release of empty containers, as well as expedite the delivery of goods. Vinamarine has stressed the importance of increased collaboration among enterprises in order to develop integrated production plans and transportation plans. This collaboration could be used to negotiate long-term contracts, which would provide some stability in the face of fluctuating freight rates.
The challenges that Vietnam faces are a microcosm for a global problem. The global maritime industry is facing similar issues , which are exacerbated by geopolitical conflicts, economic uncertainty, as well as the lingering COVID-19 pandemic. According to Drewry a leading maritime consultancy, the average composite rate of container freight has increased across different trade lanes. This reflects a trend of rising costs for maritime logistics.
In the United States the Federal Maritime Commission has been investigating possible price gouging among shipping lines and anti-competitive behavior. The European Union is also considering regulatory interventions in order to address the supply-chain disruptions that have plagued Europe.
The current situation calls for coordinated efforts on both the national and international level. In order to navigate the turbulent waters of international trade, it will be important to have improved regulatory frameworks, strategic partnerships, and technological innovations. Fostering a resilient maritime industry through policy support, investment in infrastructure, and collaboration between stakeholders will be crucial for Vietnam to mitigate the impact of rising sea-freight costs.
Global supply chains will be put to the test in the face of these challenges. The solutions developed today will determine the future of international commerce, determining the effectiveness with which the world can respond and recover from economic disruptions.