Vietnamese businesses worry about increased costs
The conflict in the Middle East has caused major fluctuations for global maritime transport, especially on the Asia-Europe route. Some shipping lines have adjusted routes and applied war and fuel surcharges through unstable areas.
Talking to Lao Dong Newspaper, Ms. Mai Thi Thu Van - Deputy General Director of Vietnam Shipping and Chartering Joint Stock Company (Vitranchart) - said that the enterprise's exploitation activities are not directly affected by the tense situation in this area.
The company's fleet is operating under time charter contracts in other areas, so it has not been affected by the tense regional situation," Ms. Van said.
According to Ms. Van, due to not exploiting routes related to conflict zones, businesses have not recorded increased logistics costs or extended delivery times. This means that the profit margin of businesses is currently not affected. However, according to business leaders, if tensions continue to prolong, international transportation costs may increase because many shipping lines have to bear additional costs arising.
“Some shipping lines operating routes related to conflict zones will incur costs due to long journeys, insurance costs and fuel costs. Therefore, shipping lines will apply additional surcharges such as war surcharges (WRS) or fuel surcharges (BAF) to compensate for costs” - Ms. Van shared.
According to her, if this situation lasts for a few months, the impact will not only be limited to the transportation sector but also affect the import and export activities of many countries.
Sea freight rates face increasing pressure
Also looking at from the perspective of the sea transport market, Mr. Do Minh Ha - Deputy General Director of Dong Do Maritime JSC - said that conflicts in the Middle East region, especially in the Red Sea and the Strait of Hormuz, are causing many fluctuations for the global sea supply and transport chain. According to Mr. Ha, due to increased security risks, many ships are forced to avoid the Suez Canal and go around the Cape of Good Hope, causing the journey to be extended by about 10-15 days. This reduces the actual ship supply capacity in the market and contributes to pushing up freight rates.
“Operating costs for ship owners have also increased due to having to buy war risk insurance and facing strong fluctuations in oil prices, when the Strait of Hormuz is a transit route for about 35% of the world's oil volume,” Mr. Ha said. To take advantage of opportunities and limit risks, businesses are calculating flexible exploitation options. Businesses can prioritize signing short-term rental contracts (time charters) from 3 to 6 months to ensure profits but still maintain flexibility when the spot freight market increases sharply. Focusing on exploiting minor bulk goods and using small-sized ships at ports where large ships have difficulty accessing, especially in Africa and Southeast Asia, can help businesses create a price competitive advantage.
Vietnamese businesses need to closely monitor conflict developments
Talking to Lao Dong Newspaper, Dr. Nguyen Duc Do - Deputy Director of the Institute of Economics and Finance (Academy of Finance) - said that it is still quite early to confirm the long-term impact of Middle East tensions on Vietnam's export activities.
In the event of prolonged conflict for many months, businesses may be forced to recalculate market strategies as well as supply chains to adapt to increased transportation costs" - Dr. Nguyen Duc Do assessed.
However, Dr. Nguyen Duc Do said that the impact of conflict is not only on Vietnam but most countries are facing a similar situation. Therefore, in terms of competitiveness, the level of disadvantage to Vietnamese goods may not be too large.
Faced with increasing geopolitical risks, according to the expert, the immediate important thing is to closely monitor the developments of the conflict to determine whether this is a short-term or long-term risk. If the situation prolongs, businesses and management agencies need to prepare different response scenarios, including adjusting export markets, supply chains or logistics strategies to minimize impacts. Proactively building both short-term and long-term scenarios will help businesses better adapt to the unpredictable fluctuations of the global trade environment. Song Anh
