Closely monitor developments in ocean freight rates

Mr. Tran Thanh Hai, Deputy Director of the Import-Export Department, informed about the impact of sea freight rates on exports.

Global trade instability, tariffs, tensions  between Israel and Iran... are affecting countries with large import-export activities, including Vietnam.

Regarding the fluctuations of the global economy and trade on import and export, Mr. Tran Thanh Hai, Deputy Director of the Import and Export Department (Ministry of Industry and Trade) said that since the beginning of April this year, when the US announced the imposition of reciprocal taxes on a number of countries, however, on April 9, there was a decision to temporarily suspend the application for 90 days, which allows countries, including Vietnam, to continue to maintain exports at the old tax rate during the suspension period.

As for China, the highest tariff rate proposed by the US was 145%. However, after the May 12 agreement, this tariff rate was reduced to 30%. This rapid change has created a strong shift in exports from China to the US as businesses take advantage of the period of deep tax reduction.

China's push to boost exports has led to a high concentration of goods, ships and containers in this area, causing shipping rates to increase sharply.

The Import-Export Department assessed that a similar situation had occurred during the Covid-19 pandemic. This phenomenon is taking place, especially on the route from Asia to the West Coast of the US. Specifically, the shipping cost of a 40-foot container from Asia to the West Coast previously fluctuated around 2,500 - 3,000 USD, now it can increase to 4,000 USD or more.

Besides, local container shortages have also begun to appear, not only in China or Vietnam but also in other countries in the region such as Indonesia, Thailand or Malaysia.

However, according to the assessment of the Ministry of Industry and Trade and the Vietnam Maritime Administration, the container shortage in Vietnam is not widespread. Some places have recorded difficulties but not as serious as during the peak of the Covid-19 pandemic.

However, developments in the geopolitical situation in the Middle East, especially tensions between Israel and Iran, are also affecting international shipping operations.

Mr. Tran Thanh Hai said that this area includes many strategic straits and shipping routes such as the Strait of Hormuz and the Suez Canal. In case the transport ships have to avoid this area and go around Africa, the transportation costs will continue to increase, affecting the cost of exporting to Europe and the East Coast of the US.

Faced with these fluctuations, the representative of the Import-Export Department recommends that businesses need to update the situation to coordinate with import or export partners. At the same time, they need to be more careful in signing contracts related to transportation, logistics and delivery of goods to limit risks, especially in the context of unusual situations such as delayed arrival of ships or being affected by conflicts.

Businesses should also consider alternative transportation options. In particular, the intermodal rail route to Europe is still available and is a potential solution. On the part of state management agencies, the Ministry of Industry and Trade, the Ministry of Construction, and the Ministry of Finance are closely monitoring developments in the logistics market to provide timely recommendations and support to businesses.

To support import and export activities, the Ministry of Industry and Trade will update information and the latest market developments to industry associations and businesses to promptly adjust appropriate production plans and orientate the search for orders from the markets.

Regularly and closely monitor the developments in freight rates and fluctuations in the global and domestic logistics market to make timely recommendations to the business community.

Along with that, regulations, standards and conditions of foreign markets that may affect Vietnam's import and export activities are also continuously updated, providing recommendations for localities, associations and import and export enterprises.

"Industries and businesses need to continue  to diversify export markets, promote exports to new markets, maintain a reasonable and balanced trade balance, and  minimize the imbalance between exports and imports in some key markets," Mr. Tran Thanh Hai noted.