What recommendations does the Ministry of Industry and Trade have to mitigate the impact of the situation developing in the Red Sea region?

This situation has led to some shipping companies announcing the suspension of cargo transport through the Red Sea region, changing schedules, and diverting routes around Africa's Cape of Good Hope.

A number of major shipping companies have announced they are suspending operations in the Red Sea region. (Photo: Bloomberg)

This situation has a negative impact on international trade, causing longer shipping times for goods transported by sea between Asia and Europe and the East Coast of North America. Shipping and insurance costs for goods exchanged between these regions have increased. Localized shortages of empty containers may also occur.

Therefore, the Import-Export Department requests that industry associations and logistics associations strengthen monitoring and regularly update the situation for businesses in their respective sectors, ensuring they have accurate information to proactively plan production and import/export activities, avoiding congestion and other adverse impacts.

The Import-Export Department also requested import-export businesses to closely monitor the situation, proactively develop appropriate plans, and communicate with partners so that, if necessary, the time for loading and receiving goods can be extended.

Businesses are seeking and diversifying their supply sources to mitigate impacts on the supply chain. Understanding rail transport options allows for different delivery methods.

When signing and negotiating commercial and transportation contracts, businesses should include clauses regarding compensation and exemption from liability in emergency situations. Adequate insurance coverage is necessary to mitigate risks and losses when goods experience extended transit times or encounter problems along this route.

Associations and businesses promptly exchange information and report emerging issues to the Ministry of Industry and Trade and other relevant ministries and agencies for coordinated resolution.

Over the past month, the Houthi movement in Yemen has carried out more than 100 missile and drone attacks on ships in the Red Sea, a vital shipping lane carrying approximately $1 trillion worth of global goods.

The US has launched a multinational security operation to patrol the region. Numerous major shipping companies have suspended their routes through the Red Sea. The oil market is closely following the tensions.

Currently, a number of major global shipping companies such as Hapag Lloyd, MSC, and Maersk have simultaneously suspended operations on this route. This disruption is expected to lead to a significant increase in sea freight costs in the near future.

See the recommendation document of the Ministry of Industry and Trade here.

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