Rising Logistics Costs Hit Exporters | Business

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A CMA-CGM freighter at the Germanlink international port in Ba Ria-Vung Tau province. (Photo: baochinhphu.vn)

Hanoi (VNS/VNA) – Rising logistics costs are hampering exportsputting businesses at risk.

Le Thi My Hanh, general manager of Banana Brother Farm JSC., noted that the costs had increased by 3-4 million VND (131-175 USD) per truck to transport the bananas from the producing regions to border posts or seaports. .

Shipping lines increased freight rates, adding a cost of at least VND30 million (US$1,314) to each container shipped to China.

While his business has been in dire straits since last year due to the pandemic, rising transportation bills add to his woes.

“Due to high costs, we planned to export 40 containers of bananas to China in February, but we could only export 12 so far,” the general manager said.

Ngo Thi Hong Thu, general manager of Ameii Vienam JSC, admitted that the logistics costs were beyond her company’s capabilities.

As a result, the company has to refuse several long-distance orders from overseas partners due to high transportation costs.

She also thinks that not only businesses, but also farmers will suffer.

“Companies are struggling to cover rising logistics costs. Given the situation, farmers’ produce will be traded lower,” she explained.

Ngo Tuong Vy, deputy manager of Chanh Thu Fruit Export and Import Ltd., said her company has never been through such a difficult time as it is now.

His business, which has not recovered from the shocks of the pandemic, is experiencing new problems related to rising fuel prices and rising logistics costs.

She revealed that the company had no choice but to increase the price of its products to cover assembly costs.

“Costs are rising, so fruit prices will be adjusted upwards by at least 5-10% accordingly. However, higher prices normally erode competitive advantages, increasing business risks,” she said.

Nguyen Hoai Nam, Deputy Secretary General of the Vietnam Association of Seafood Exporters and Producers, acknowledged that logistics costs were $5,000 to $10,000 higher than in 2020 for each container to Europe or the United States.

However, higher freight rates do not necessarily mean better service.

The secretary said some shipping lines frequently delay shipments for 10 to 30 days for no reason, which is making the situation worse.

“Companies must not only pay higher freight rates, but also compensate their trading partners for late deliveries,” he explained.

According to Van Nhat Tung, Marketing Director of CMA-CGM Vietnam JSC, freight rates have soared to around USD 16,000 per container to Europe lately, from just USD 5,000 per container at the start of 2021.

He said rates should continue to rise in March.

“The freight rate in March depend on the number of slots booked by customers. It looks like rates are likely to go up,” the official said.

He also pointed to rising fuel prices and strong demand for slots as the main reasons for higher freight rates in early 2022.

With high logistics costs posing significant risks to exporters, experts are calling for immediate actions to defuse the situation, including reducing fuel prices.

“The state has reduced the fuel tax and offered billions of dong loans to the airline industry to get it out of trouble. Now is the time to do the same for agricultural exports. For example, the The state could provide fuel subsidies to transport companies, processing companies and exporting companies to help them reduce their costs,” explains a logistics expert./.

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