“In July 2020, the freight cost from Hochiminh to Miami, US was $3400 per 40ft. And today, July 7th 2021, we could not have booking on vessel even we paid $16,500 for the same.” Said by Ms. Trinh Thi Van Anh, the logistic manager of VMT Forwarding Co.
Not only the freight cost from Vietnam to the US but also from Vietnam to other ports increased. The routine from Haiphong to Mumbai, India increased to $5500 per 40ft which is 900%. And the exporters have to pay $14,000 per 40ft from Vietnam to EU ports.
(Evergreen container shipping line)
The problem with vessel transportation happened since October 2020. And it is not ended yet.
High demand for commdities stocking:
The US people have been vaccinated well. The US president signed to release 1900 billion dollars for supporting the Economy. And the demand for all industies moved up. The jobs are provided to most people. Moreover, it is the first time after long decades, the US economy is expected growing 6%. Hence, the US importers must import more than enough raw materials. They have been paying whatever freight cost to have containers for carry the commodities from China and Vietnam.
Port congestion in the US and the EU ports:
Due to massive importing from the US, containers have been sent to LAX, Miami, Newyork, etc. There were more than 100 vessels waiting to dock in LAX. The logistic companies have been facing hard to clear customs. There are so many containers. However, they do not have enough labors because not all labors return to work yet. Thus, the containers are lying in the US ports.
In the EU area, the importers mostly stopped importing from December 2020 till March 2021. They were waiting for lower freight cost. However, the shipping companies made them surprise by increasing expenses every month. After long time waiting, the EU importers are now paying whatever the cost to obtain the containers. They import massive quantities for the shortage in 1st quater of 2021. All containers were sent to the ports in one/ two months. Therefore, port congestion happens in the EU now.
Covid has been spreading new waves in China:
From end of April, the new wave of Covid has been attacking Asian countries including China. Guandong province in China is locked down. Hence, the port Shenzhen is having problem with container congestion. Shenzhen is one of the largest international seaport. Hence, containers are stuck in Shenzhen.
However, the Chinese exporters in other provinces are accepting the freight cost $20,000 – $22,000 per 40ft. They must ship the cargo to the US and the EU. They signed contracts with parters since early months in 2021. So they have to pay whatever freight cost to fulfill the agreement.
Is there any speculation in shipping companies?
Some shipping companies cut the routine from Vietnam to the Middle East and West Africa. They prefer to use containers for carrying cargos to the US and the EU. The freight cost is quoted higher every 10-15 days. “I paid $12,000 for an empty container. When our truck went to the port for taking container, shipping companies refused to provide. They told us that there was no space on vessel. I gussed they provide the booking vessel to other exporters who paid higher than mine” Said by Le Thanh Tuyen, exporting director of Quang Phong Food & Baverage.
Finally, the world has been affected greatly because of Covid-19. Thus, the problem with shipping freight cost might not end until 70% world citizen would have vaccinated. And it might not happen until June 2022 as per some experts in this import/export industry.