Cargo transportation time may be extended
The US and Israel launched a large-scale military airstrike targeting Iran, marking a serious escalation in regional tensions in the Middle East.
The Ministry of Industry and Trade forecasts that consumer goods prices, fuel prices, and world oil prices will fluctuate in an increasing direction in the coming time, causing indirect and multi-dimensional negative impacts on Vietnam's production and import-export activities in general as well as with the Middle East region in particular.
Talking to Lao Dong Newspaper, Mr. Pham Quang Anh - Director of DONY Garment Co., Ltd., a unit with export orders to the Jordanian market (in the Middle East region) - said that due to the recent tense conflict situation, the enterprise has not been able to fully assess the level of impact. On the afternoon of March 2, the enterprise had an online meeting with customers to update more detailed information and have proactive plans to minimize risks.
According to Mr. Pham Quang Anh, if the conflict escalates and strongly affects international transport routes, the transportation time of goods may be significantly extended compared to normal.
Normally, goods leave about 1 month, but when stress occurs, it can last 3-4 months" - Mr. Quang Anh shared.
According to DONY representatives, this prolongation not only puts pressure on the company's cash flow but also directly affects the business season of imported customers. For seasonal items, late delivery may cause businesses to miss sales opportunities. For example, exporting summer goods but only arriving at the end of summer is considered a loss of sales opportunities.
Not only does it prolong transportation time, geopolitical tension also leads to increased transportation costs. Mr. Anh said that during the previous period of tension in the Red Sea, container freight rates once increased from about 1,500 - 1,600 USD to more than 5,000 USD/container, even businesses found it difficult to order ships due to lack of supply.
In the coming time, we will continue to closely monitor international developments and work closely with customers to update appropriate response plans when necessary" - Mr. Quang Anh emphasized.
Pay attention to contract terms to protect businesses from risks
Faced with the above tense situation, the Import-Export Department (Ministry of Industry and Trade) requests import-export industry associations and logistics-operating associations to closely monitor the developments of the situation to proactively plan production, import-export and freight transportation, avoiding congestion and minimizing negative impacts due to tensions from the conflict between Israel, the US and Iran.
It is necessary to diversify the sources of goods supply as well as find other markets with similar demand sources to choose alternative options, minimize the impact when export activities to Israel, Iran and the Middle East face difficulties, and have long-term plans to proactively respond to similar incidents in the future.
When negotiating and signing purchase and sale contracts, it is necessary to pay attention to and focus on contracts (or clauses) on logistics, transportation, delivery and insurance to protect businesses from risks and losses in case of incidents, ensuring that transportation contracts have clauses on force majeure situations, compensation and cost sharing when goods encounter risks.
