High sea freight rates, what does the Ministry of Industry and Trade recommend?

Industry associations need to work closely together.

The Ministry of Industry and Trade has just issued Official Dispatch No. 5178/BCT-XNK dated July 19, 2024 to Import-Export Industry Associations; Logistics Associations; Vietnam Shipowners Association; Vietnam Shipowners Association; Vietnam Association of Maritime Agents, Brokers and Services on solutions to promote import and export in the context of high sea freight rates.

High shipping costs affect import and export activities

The document clearly stated that in recent times, the increase in shipping rates, local congestion at some ports in Asia, and the lack of empty containers have affected import and export activities. The Ministry of Industry and Trade discussed with associations and businesses as follows:

First, coordination between import-export enterprises and logistics service enterprises

Import-export industry associations work with logistics associations, Vietnam Shipowners Association, Vietnam Shipowners Association, Vietnam Maritime Agents, Brokers and Services Association to improve capacity, gather member businesses to build production and business plans, transportation plans, import-export plans as a basis for signing long-term contracts with shipping lines, minimizing the impact of freight rates and surcharges in the current period of complex and unpredictable developments in the international market.

Second, freight diversion and alternative routes

In addition to the current sea route, import-export businesses with Europe can consider alternative routes, including combined multimodal transport routes, going by sea to ports in the Middle East, then by air, rail or road to Europe.

Third, increase the utilization of incentives of FTAs

Import-export industry associations coordinate with the Ministry of Industry and Trade, the Vietnam Federation of Commerce and Industry and relevant agencies to increase dissemination to import-export enterprises about the regulations of free trade agreements (FTAs) to facilitate trade and increase the rate of taking advantage of incentives from these agreements.

Fourth, resolving backlog of import and export goods

Import-export enterprises coordinate with customs agencies and port operators to speed up the processing of backlogged goods at ports, contributing to promoting the flow of goods and improving the capacity of handling goods at ports.

Fifth, support training and improve the capacity of negotiating sales contracts and insurance contracts for small and medium enterprises.

Industry associations coordinate with VCCI to strengthen propaganda and improve the capacity of small and medium-sized import-export enterprises in negotiating and signing foreign trade contracts and insurance contracts to protect enterprises from risks and losses in case of incidents, especially for goods transported by sea through routes with high risk levels.

Sixth, develop a prevention and rapid response plan

Import-export associations and enterprises proactively develop prevention and response plans to minimize risks and losses from similar complex and unpredictable incidents in the future.

Many solutions to overcome difficulties in sea freight rates

Regarding sea freight rates, recently, Minister of Industry and Trade Nguyen Hong Dien sent a letter to Mr. Turgut Erkeskin, President of the International Federation of Freight Forwarders Associations (FIATA), proposing a number of contents related to this issue.

In the letter, the Minister hopes that Mr. Turgut Erkeski and FIATA can support and take practical measures to help Vietnamese businesses overcome the above difficulties.

Specifically, FIATA can propose solutions to the above problem. At the same time, share experiences and solutions that countries and FIATA member associations have been applying, especially in handling fees other than port charges.

Within its sphere of influence with other international organizations in the fields of import and export, logistics and supply chain management, it emphasizes Vietnam's position in the global value chain to have appropriate priorities in terms of means and equipment for transporting import and export goods for the Vietnamese market.

The Minister of Industry and Trade also hopes that FIATA will support the Vietnamese Government in its strategy to position Vietnam as a center for goods production and a new international transit location in Asia in the global logistics business community.

Authorize Vietnamese organizations to participate in training and granting FIATA certificates to contribute to quickly training professional human resources with high ability to access international markets...

Most recently, at the European Trade Counselor Conference held in Italy, Mr. Nguyen Anh Son - Director of the Import-Export Department (Ministry of Industry and Trade) said that in recent years, the logistics service industry has made significant contributions to import-export activities, making Vietnam an important link in the global supply chain, import-export activities a bright spot due to the outstanding growth rate compared to the previous period. Vietnam's total import-export turnover increased from 428.1 billion USD in 2017 to 681.1 billion USD in 2023 with an average growth rate of about 8.4%/year for the entire period of 2017 - 2023.

Mr. Nguyen Anh Son emphasized that in recent years, Vietnam has been transforming strongly to become a major global manufacturing center. Vietnamese enterprises have produced goods with a wide variety of types, competitive prices and increasingly improved quality. At the same time, after the pandemic as well as recent geopolitical and economic instability, many corporations, retail and wholesale distribution channels are promoting diversification strategies, ensuring sustainable supply and have chosen Vietnam as one of the strategic locations in the global supply chain.

However, according to the Director of the Import-Export Department, Vietnam's import-export activities have grown again but have continuously encountered difficulties with the unstable situation in the Red Sea, the Russia-Ukraine war, the Israel-Iran tensions spreading in the Middle East and a number of other unpredictable factors that have caused shipping rates and surcharges to skyrocket. The shortage of empty containers and congestion at some major international transit ports really need targeted and practical support solutions to support the import-export and logistics activities of Vietnamese enterprises.

Therefore, the Director of the Import-Export Department suggested a number of solutions such as shipping lines strictly implementing the provisions of Vietnamese law, especially the provisions on listing and publicizing freight rates. Do not impose unfounded fees and surcharges with excessively high rates, affecting import-export activities. Strengthen supervision of maritime transport businesses, providing container shipping services by sea to list prices and surcharges outside the price of container shipping services by sea in compliance with regulations.

In addition, businesses need to diversify goods and alternative routes. Increase the use of incentives from FTAs. Resolve backlogs of goods and procedures for import and export goods. Support training and improve the capacity of negotiating sales contracts and insurance contracts for small and medium enterprises...

Source: https://congthuong.vn/gia-cuoc-van-tai-bien-tang-cao-bo-cong-thuong-khuyen-cao-gi-333677.html