Vietnam - Freight Increases Put Heavier Burden On Businesses

Bad pieces of news have come in rapid fire in recent days, dazing exporters. After the news about the narrowed export markets, petrol price increase, and high interest rates; they now have to pay higher for shipping fees.

Foreign shipping firms have informed their plans to increase the container freight, commencing from March. The new freights would be applied to the important sea routes to the Middle East, Europe and the US.

Vietnamese businesses would have to pay 500 dollars per TEU more in freight for the containers to the Middle East from March 1, 700 dollars per TEU more from March 1, and 400 dollars from April 1. Meanwhile, the freight to America would increase by 300 dollars from March 15 and 400 dollars per TEU from May 1.

Export companies not only have to bear the increasing freights, but also have to shoulder other surcharges relating to the shipping, which means that the goods prices will increase.

From March 1, the Hung Vuong Seafood Company has to pay 10,400 dollars more as the additional freight to carry 13 containers of frozen tra fish products to Europe, America and South America. The company exports 400 containers of tra fish products a month on average.

Duong Ngoc Minh, General Director of the Hung Vuong Seafood Company, said that he himself got shocked when hearing that every container bears 800-1,000 dollars more in fees. Minh said that the higher freight means that the company has to pay 1000 dong more for every kilo of tra fish products.

Analysts say that rice, cashew nut, coffee, pepper, garment and wooden furniture exporters would meet big difficulties when foreign shipping firms unanimously informed the freight increases, applied as of March 1, 2012.

OOCL, a shipping firm, has announced that it will charge 600 dollars per container more on the goods from Vietnam to North European and Mediterranean countries. Hapag – Lloyd AG has also raised the shipping fee for the routes to South America by 600 dollars per container.

The shipping fee for the routes to Panama and Caribbean has also been raised by the shipping firm by 560 dollars per 20 feet container and 800 dollars per 40 feet containers. Other shipping firms such as CMA, Maesk Line, NYK have also raised the fees by 800-1,000 dollars per container.

“Earlier this year, we only had to pay 1700 dollars in total for shipping a container of cashew nuts to Europe. However, the shipping firms have raised the fees by 800 dollars to 2500 dollars. The higher fees mean no more profit for the company,” director of a cashew nut export company complained.

Tran Thi Ha, the owner of a private business in district 12, said she has just paid 42 million dong for a container of materials imported from China, an increase of 10 million dong if compared with the end of 2011.

Ha went on to say that not only the freight has increased, the fees charged by foreign ports have also escalated. Only 30 percent of the sum of 42 million dong was paid for the freight, while the other 70 percent for service fees and surcharges.

Doan Ngoc Tho, Director of THO Trade and Service Company, also said that his enterprise has to pay 500-800 dollars more for every container of chicken legs and wings imported from the US and Brazil.

Nguyen Huu Toan, Deputy General Director of the Saigon 2 Garment Company, said that after March 10, the fee for every trailer that carries containers from the port to the factory has increased by 200,000-300,000 dong.

Meanwhile, Nhu Hong Hanh, a senior executive of Viet Tien Garment Company, a big exporter, said that even if the buyers bear the freights, exporters still have to grin and bear many other unreasonable kinds of fee, while they cannot raise the export prices.

Source: SGTT

Business & Investment Opportunities

YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Consulting, Investment and Management, focusing three main economic sectors: International PR; Healthcare & Wellness;and Tourism & Hospitality. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programs. Sign up with twitter to get news updates with @SaigonBusinessC. Thanks.