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Businesses are less worried when ocean freight rates decrease

​After a long period of galloping because of container shortages and disruptions caused by epidemics and world political fluctuations, freight rates by sea have now plummeted by 70 to 80% compared to the peak period.

Reduced sea freight charges will help import and export businesses breathe easier

As a major import-export country in the economy, the reduction of sea freight rates has also created more favorable conditions for many businesses to optimize the cost of goods and increase competitiveness in the market.

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Reduced freight rates create favorable conditions for export goods

According to VnDirect Securities Company (Hanoi), global shipping will face many difficulties in 2023 due to the economic downturn, which negatively affects trade activities as well as shipping output. In the international market, after a period of rapid growth, sea freight rates suddenly dropped, in which the global container index - representing container freight rates plunged 67% compared to the previous level. The peak was set in September 2021. Not only that, the BDI index (representing the price of transporting raw materials) has dropped 71% from its peak.

This trend of reducing freight rates is an opportunity for Vietnamese exporters, which are forecast to face many difficulties in 2023. Businesses that have endured high sea freight rates have "eaten". If you don't make a profit", reducing competitiveness can now be easier to breathe. According to Mr. Huynh Thanh Van, Chairman of the Board of Directors of S furniture Joint Stock Company (Binh Duong), his business specializes in the field of manufacturing and exporting wooden furniture. Key markets are Europe and the United States. The deep reduction of sea freight rates to the world helps businesses reduce a large cost. “In the past, depending on the region, each container of exported goods had to pay even tens of thousands of dollars, but now it has decreased greatly. From the peak of 20 thousand USD to North America, now sometimes down to 80%,

Similarly, Dong Nai is a locality with many enterprises making export goods, especially raw goods and agricultural products. A representative of an agricultural product exporter in the province said that along with China's lifting of restrictions on the prevention and control of the Covid-19 epidemic and the promotion of free trade agreements, there are opportunities to export agricultural products. next time is huge. Due to the characteristics of agricultural products that are often raw, occupying a large area while the value of each air container is high, the reduced international shipping fee will help businesses a lot.
Need to improve logistics services in the country
International sea freight rates have decreased, but according to businesses, one of the current limitations is that domestic transportation costs are still high because Vietnam's logistics services are developing inadequately. As an enterprise specializing in supplying raw materials for the packaging and printing industry, Minh Cuong Phat Paper Co., Ltd. in Amata often has to transport goods from North to South, but in recent times, especially before difficulties difficulties from the epidemic, supply disruption, and transportation costs of enterprises have increased. Mr. Nguyen Tri Minh, director of the company, said that in order to compete, reducing transportation costs is very important. This needs the companionship from the State, especially the synchronous development of related service infrastructure.

According to Mr. Pham Quoc Long, Chairman of the Vietnam Association of Shipping Agents and Brokers (VISABA), besides road, waterway has many potentials in freight transport but has not yet fully promoted its role. Localities need to have investment incentives for business units in the field of inland waterway transport, especially tax incentives, free port and warehouse infrastructure. “The cost of water transport is 50-60% lower than other modes of transport. The number of transportation is also increased, reducing pressure on roads, limiting congestion and environmental pollution, "said Mr. Long.

Similarly, Vice Chairman of Dong Nai Import-Export Association Nguyen Duy Hung also shared that the problem that businesses face is the lack of synchronization in the development of logistics services in the region. Along with that, other factors create constraints that make it difficult for businesses in the industry to develop. Therefore, it is necessary to set out overall problems and solutions, with mechanisms, motivations and a "conductor" to promote infrastructure development in general and factors related to logistics services in particular.


Author: Phan Anh

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