It is reported that with the recovery of Vietnam’s economy, the shortage of shipping space and air transport capacity in Vietnam has become prominent. After several months of blockade, Vietnam’s exports rebounded quickly, which not only pushed up freight rates, but also caused fierce competition between shippers and freight forwarders for space.
According to reports, Vietnam’s strict anti-epidemic blockade ended in early October, but before that, Vietnam’s GDP had shrunk by 6.1% in the third quarter. Vietnamese business leaders warned that if restrictions are not lifted, Vietnam will lose immeasurable orders and investment. .
For example, Vietnam’s garment industry exports fell 18.6% year-on-year in September after many factories were forced to close.
However, after the blockade was lifted, Vietnam’s exports showed amazing resilience, with the Ministry of Commerce and Trade predicting that Vietnam’s exports will grow by 10% to US$600 billion.
Jan Segers, general manager of Notam Logistics Vietnam, said Vietnam has performed well after the COVID-19 epidemic.
“After poor GDP in Q3, there is excitement about factory openings and the ‘new normal’.”
“At the end of the year, coupled with Vietnam’s Tet Festival, there is a huge demand for freight in Vietnam.”
The result, Segers said, is a lack of container capacity and space, which keeps freight rates high. “Freight rates are still rising and may continue until January next year,” he said.
It is reported that a 40-foot container from Ho Chi Minh City to Los Angeles costs approximately US$13,000 and $16,000 to New York.
“Shippers from Hai Phong to Europe are no longer able to secure space at the fixed contract price of $12,000 per 40 feet because spot prices have exceeded $14,000,” Segers added.
“I’m no prophet, but my guess is that freight rates will probably go down and stabilize to a new normal, but they won’t stay at the very low levels they were before. It all depends on how the congestion issues in the U.S. and Europe are resolved so that Containers can be returned to Asia.”
In fact, Mark Gilliam, the boss of Ho Chi Minh-based freight forwarding company Cargoteam, said that cargo owners and freight forwarders are “fighting” for containers and space, and freight rates are still about five times higher than before the outbreak.
“Shipping companies do not pay attention to contract freight rates,” he said, adding that shipping companies have injected little new capacity into the market because Vietnam “is not their priority.”
“They’re making more money from China,” Gilliam added. “But thanks to some good operators, we can still manage to get space, if we have to fight for it every day for our customers.”
At the same time, Segers said Vietnam’s air cargo market also remains tight.
“We are also seeing strong demand for air cargo outside of Vietnam, with aircraft being booked weeks in advance. We have six charter flights scheduled over five weeks to supply customers in the US and Spain.”
Seagers revealed that air freight from Vietnam to Chicago costs up to $20 per kilogram.
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