Since late 2023, many shipping firms have had to change their routes and not go through the Suez Canal but instead reroute around the Cape of Good Hope, which adds 10-15 more days of travel time.

Along with restrictions for vessels to go through the Panama Canal because of El Nino, the latest events in the Red Sea have had a negative impact on the world’s shipping industry, including Vietnam’s import-export activities, especially with Europe and North America.

Since late December, MOIT has released bulletins and recommendations to associations, logistics firms and import-export companies to help mitigate the impact from the Red Sea crisis.

In 2023, Vietnam-Europe import-export turnover was $71.14 billion, and the figure was $122.3 billion for North America. Total import/export turnover with the two regions accounted for 28.4 percent of total import/export turnover of Vietnam in 2023. 

The Red Sea crisis has led to shipping fee increases, lack of empty containers, and prolonged shipping time. It has also affected the capability of Vietnam to fulfill import/export orders.

More seriously, freight and oil price increases will cause a domino effect, causing prices of other goods to increase, and worsen economic and geopolitical uncertainties, thus affecting global economic recovery.

Truong Van Cam, vice chair and secretary general of the Vietnam Textile and Apparel Association (Vitas), said that enterprises in the textile and garment industry are applying CIF (cost, insurance, freight) when importing goods, and FOB (free on board) when exporting goods. So the direct impact is not too strong in the immediate time. 

However, sellers and buyers have to share difficulties. In other words, clients will ask Vietnamese enterprises to share losses to mitigate damages.

As the shipping time lasts an additional 10-15 days, Vietnamese enterprises will have less time to fulfill orders to ensure delivery is on schedule. This puts a burden on producers.

No one knows when the problem can be solved. Cam asked shipping firms to provide updated information so that Vietnamese producers can adjust production and business plans to optimize costs.

Nguyen Hoai Nam, deputy chair of the Vietnam Association of Seafood Exporters and Producers (VASEP), said the shipping fee to transport one container of goods to the West Coast has increased by 70 percent, while the fee to transport frozen products to Europe has increased by four times.

Vietnamese enterprises have already been facing difficulties because of falls in orders from foreign importers.

Nam said enterprises want to receive support from the state and cooperation from shipping firms, an important link in export activities.

“Shipping firms have to reroute around the Cape of Good Hope amid a 30-40 percent decrease in imports and exports in 2023, which means that shipping firms will cut mother vessels. This, plus tensions in the Red Sea, will increase the time needed to transport goods from Asia to Europe by 14 days,” Nam aid.

Regarding farm exports, Hoang Thi Lien, chair of the Vietnam Association of Pepper and Spices, said exports to the EU account for 20 percent of all farm exports.

“A business loaded goods on a ship on December 20, 2023, and 15 days later, on January 5, 2024, it received notice from the shipping firm about a surcharge of $2,000 per 40-feet container,” Lien said.

“Because of the arbitrary application of charges and surcharges, without notice in advance and without negotiations, Vietnamese enterprises are now like "a fish on a cutting board", she said, adding that the behavior of shipping firms has not been transparent or reasonable.

Meanwhile, Nguyen Quoc Chiem from Sao Ta Food said a shipping firm informed SaoTa on January 2 that the shipping fee for containers exported to Europe had soared to $5,300-6,300 per container.

Luong Bang