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Sea freight, logistics costs

Sea freight, logistics costs

Written by Milcah Tran

Sea freight, logistics costs increase again “overwhelming” businesses

May 09, 2022

Although commodity exports in the first quarter of 2022 grew positively, the “burden” of sea freight is causing businesses’ profits to drop seriously.

Significant increase in sea freight

According to Mr. Truong Dinh Hoe – General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), over the past time, exporters in the seafood industry have had “headaches” before the situation of sea freight rates and expenses. logistics costs increased dramatically.

A survey by Lao Dong from many information channels shows that, although in 2021, shipping rates have peaked many times, in the first quarter of 2022, this situation has not cooled down, even has a more tense part, especially since the conflict between Russia and Ukraine has become more and more complicated.

Data from VASEP shows that currently, freight rates in many sea routes have set a new record higher than the “peak” level of 2021. Specifically, freight rates to Thailand (Bangkok port, Laem Chabang) range from 1,600-2,500 USD/cont depending on the company; freight rates to the Philippines (Davao, Cebu, General Santos) range from 4,000-5,300 USD/container (cont); going to the US West Coast ports ranges from 12,000-14,000 USD/cont (depending on the carrier); going to the East Coast of the US such as (Baltimore, Miami, New Orleans, Houston…) fluctuates at a high level from 19,000-22,000 USD/cont, depending on the airline…

In tandem: the increase in domestic seaport infrastructure charges

While sea freight and container rental costs are “galloping”, the collection of seaport fees from April 1, 2022, makes businesses even more difficult. Mr. Pham Thai Binh – General Director of Trung An Hi-tech Agriculture Joint Stock Company – urgently asked the question: What is the reason for the port fee increase? The entire land, river, and sea area is the property of the country, the port infrastructure has been built and the port enterprises have been exploiting it for a long time. Such an increase in fees “drops water in the rain” is a direct hit to the cost of production and processing for farmers and businesses.

In fact, after 1 week of collecting fees for seaport infrastructure works, the cost of enterprises has incurred hundreds of millions of dong. According to Mr. Tran Quoc Manh – Chairman of the Board of Directors of Saigon Production and Trade Development Joint Stock Company (Sadaco), every month Sadaco exports about 20 containers of goods, collecting additional seaport infrastructure costs will cause businesses to incur additional costs. nearly 100 million.

Faced with this situation, recently, the Private Economic Development Research Board (Board IV) of the Advisory Council for Administrative Procedure Reform of the Prime Minister has issued an urgent document to report a number of shortcomings and impacts. negative impacts on business operations from the collection of fees for the use of seaport infrastructure in Ho Chi Minh City. In this document, Board IV also proposed the Prime Minister to consider and direct the People’s Committee of Ho Chi Minh City to study and suspend toll collection at this time.

According to a report by Xeneta Shipping Analysis Company – a unit specializing in measuring container freight rates under long-term contracts globally, sea freight under long-term contracts increased by 7% in March, equivalent to an increase of nearly 97% over the same period in 2021.

Source: Bao Lao Dong


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