Shipping industry advised to diversify routes amid rising freight rates

Ministry of Industry and Trade Proposes Alternative Shipping Routes for European Exports amid Rising Freight Costs

The Ministry of Industry and Trade has recently issued a directive to associations of import-export industries, logistics, shipping owners, agents, brokers, and maritime services regarding solutions to boost exports amid soaring ocean freight rates.

The Ministry noted that recent increases in ocean freight rates, localized congestion at some Asian ports, and a shortage of empty containers have impacted export and import activities.

Therefore, the Ministry has requested relevant agencies to focus on organizing cargo diversion and alternative routes. In addition to the current sea routes, exporters to Europe can consider alternative routes such as combined multimodal transport, using sea transportation to ports in the Middle East, then continuing by air, rail, or road to Europe.

The Ministry of Industry and Trade also proposed that exporters cooperate with customs and port operators to expedite the clearance of detained goods to increase the flow of goods.

Industry and logistics associations, along with the Vietnam Chamber of Commerce and Industry (VCCI), are encouraged to provide training and enhance negotiation skills for small and medium-sized enterprises.

Import-export associations and enterprises are also recommended to proactively develop contingency plans to mitigate risks and losses from similar complex and unpredictable incidents in the future.

These recommendations are made in the context of a 6-month import-export turnover of nearly $370 billion, up 16% compared to the same period in 2023. However, freight rates on major routes continue to rise.

Some businesses reported that the price of each container to Europe ranges from $4,000 to $5,000, more than 2-3 times higher than at the end of last year. The average freight rate for each container exported to the US is about $6,000-7,000, doubling.

Freight rates to nearby regions such as China, Japan, South Korea, and Southeast Asia have also increased by about $1,000-2,000 per container.