Want to be in the loop?
subscribe to
our notification
Business News
BUSINESSES START TO FEEL IMPACT OF RED SEA SHIPPING CRISIS
The Red Sea shipping crisis may put a squeeze on Vietnam-based businesses as it lingers on with no foreseeable end in sight.
Tran Viet Huy, managing director of Tracimexco – Supply Chains and Agency Services JSC (TRA-SAS), told VIR that, "The Red Sea disruption is impacting ocean freight via the Red Sea and Suez canals. It is mainly hitting shipments from Asia to Europe and some US routes. The cost of ocean freight to EU ports from Asia has gone from less than $2,000 per 40-foot shipping container before December 2023 to over $5,000."
Almost shipping lines must turn it routes via the Cape of Good Hope instead of Suez Canal which increases expenses and transit time. The lack of empty containers has also been raised by shipping lines.
"However, the increasing freight costs seem unreasonable. They have been amplified by shipping lines to cover the cost of new vessels that are set to launch in 2024. Container warehouses are running under capacity. The extra cost incurred from shipping a container via the Cape of Good Hope is less than $300 versus the increase of $3,000 per 40-foot shipping container," Huy added.
Huy emphasised that some industries which have big volume of trade between the EU and Asia are feeling the impact such as textiles and garments, agriculture, and seafood.
Echoing this view, Jan Segers, general manager of Noatum Logistics Vietnam Co., Ltd, said, "In the short term, Red Sea shipping disruption is increasing the rates by adding a ‘war risk’ surcharge or by going via the Cape of Good Hope route which is longer and needs more fuel.”
He further noted that the Red Sea issue is being escalated might last for years. It will be difficult for buyers and sellers to adopt different strategies to deal with it. However, the challenge facing shipping lines needs collaboration at a government level.
According to Fitch Ratings, shipping costs have increased by more than 150 per cent since December 2023 as a result of disruptions to maritime traffic in the Red Sea. These increases are likely to be reflected in rising import prices in the coming months, and longer shipping times will reduce supplies of intermediate inputs and consumer goods. The outlook for shipping costs is uncertain, but a plausible scenario is that they will remain high for several quarters.
Economist Brian Lee Shun Rong at Maybank said, “The Red Sea ship disruptions are one risk worth watching, as any major and prolonged escalation may disrupt supply chains, inflate shipping costs and dampen trade. Indeed, rising tensions in the Red Sea have led to delivery delays and surging container freight costs, which may have disrupted shipments.”
He cited data by the General Statistics Office showing declines in production of phone components (down 15.3 per cent), televisions (down 11.3 per cent) and mobile phones (down 3.5 per cent). A slump in production volume runs contrary to rising phone exports, and may suggest that companies are cautious about the demand recovery and/or disruptions in the Red Sea.
Soủce: VIR
Related News
PHONE AND COMPONENT EXPORTS HIT $18.4 BILLION IN FIRST FOUR MONTHS
In terms of markets, the United States has become Vietnam's largest customer instead of China (in the first quarter of last year). Specifically, in the first quarter of this year, the US spent more than $3.05 billion importing all types of phones and components from Vietnam, an increase of 30.4 per cent on-year. The Chinese market ranked second with more than $2.5 billion, down 28 per cent on-year.
BA RIA-VUNG TAU PROVINCE RANKS FIRST IN FOREIGN INVESTMENT CAPITAL
Statistics published by the Foreign Investment Agency under the Ministry of Planning and Investment showed that between January and April, Ba Ria-Vung Tau lured $1.52 billion in overseas funding, equalling 16.4 per cent of the total foreign investment in the whole country.
INFOGRAPHIC SOCIAL-ECONOMIC SITUATION IN THE APRIL AND FOUR MONTHS OF 2024
The monthly statistical data presents current economic and social statistics on a variety of subjects illustrating crucial economic trends and developments, including production of agriculture, forestry and fishery, business registration situation, investment, government revenues and expenditures, trade, prices, transport and tourism and so on.
KEY DRIVER GAINS A MUST FOR GROWTH
Only slight order number improvements and enterprise confidence sentiment mean it may be difficult for the country to hit its desired growth goals this year.According to the World Bank’s biannual economic update report released last week, it is expected that the Vietnamese economy may grow by 5.5 per cent this year and 6 per cent next year, making it among top growth leaders in the world.
ADDED VALUE OF INDUSTRIAL SECTOR UP 6.18 PER CENT IN Q1
Vietnam’s industrial sector posted significant growth in the first quarter of 2024, of an estimated 6.18 per cent compared to the first quarter of 2023. In particular, manufacturing and processing saw robust growth of 6.98 per cent.
TEXTILE AND GARMENT BUSINESSES FACE DIFFICULTIES DUE TO LACK OF DOMESTIC SUPPLY
Infrastructure for weaving, dyeing and fabric production is still limited, and there is no spatial planning for development and centralised wastewater treatment, said Nguyễn Thị Tuyết Mai, Deputy General Secretary of the Việt Nam Textile and Apparel Association (Vitas).