Risk of damage, high freight rates
Talking to Lao Dong Newspaper, Mr. Nguyen Dinh Tung - Chairman of the Board of Directors, General Director of Vina T&T Group - said that the Middle East is not only a place that strongly consumes high-end fruits but also an important "gateway" for Vietnamese agricultural products to penetrate deeply into the Arab and North African blocs, helping businesses diversify risks and avoid dependence on traditional markets.
According to Mr. Nguyen Dinh Tung, the tense conflict situation in the Middle East has affected logistics and business orders. Accordingly, ships have to pass through Cape of Good Hope, causing delivery time to be extended by 12 - 20 days. Sea freight rates have skyrocketed, plus war risk premiums (WRS) and insurance premiums significantly increase costs. The consequence is that import partners have a psychology of hesitation and hesitation in closing long-term orders.
The biggest risk is that the time spent at sea is too long, reducing quality, increasing the rate of fruit damage, leading to the risk of being pressured on prices by partners or refusing to receive goods. To protect ourselves, we are required to use 100% CA (atmospheric control) technology refrigerated containers, select more strict sources of goods and negotiate transparently from the beginning so that customers can share the risk of loss" - Mr. Tung informed.
Regarding the long-term response scenario, a representative of Vina T&T Group said that the core strategy of the enterprise is to flexibly shift its focus to nearby markets (ASEAN, China, East Asia) to avoid risky shipping routes.
From the perspective of businesses exporting vegetables and clean agriculture, Mr. Nguyen Dinh Tung suggested that Vietnamese Trade Offices abroad, especially in the Middle East region, should continuously update and warn early of market, security and payment risks. Mr. Tung also proposed that the State Bank consider policies to support credit and debt rescheduling for businesses that are stuck with cash flow due to slow payment due to late delivery.
Goods at sea are also not sure when they will dock
Talking to Lao Dong Newspaper, General Secretary of the Vietnam Fruit and Vegetable Association (VINAFRUIT) Dang Phuc Nguyen said that many businesses in the association exporting to the Middle East are facing difficulties.
Some shipping lines do not accept containers passing through conflict zones, or have to change routes to ensure safety. Goods currently at sea cannot be guaranteed when they will dock" - Mr. Dang Phuc Nguyen informed.
According to representatives of the Vietnam Fruit and Vegetable Association, the group of goods most affected is fresh agricultural products due to their short shelf life. Goods that have been packed in containers and gathered at the port but cannot be loaded onto ships also face great risks. If they have to switch to other markets, businesses may have to change packaging and packaging specifications because each market has different standards. This incurs additional costs, even forcing them to consume domestically at low prices or cancel them.
In a worse scenario, if key transport routes such as the Red Sea are disrupted for a long time, the impact will be much more serious.
Going around increases costs and storage time. At the same time, the increase in fuel prices also leads to an increase in domestic production and transportation costs. Goods that are difficult to circulate will affect the entire supply chain" - Mr. Dang Phuc Nguyen assessed.
On the policy side, he proposed that the Ministry of Industry and Trade and maritime management agencies review the types of surcharges that shipping lines are applying, especially war surcharges and fuel surcharges, to avoid unreasonable price increases. It is necessary to consider credit support solutions such as debt rescheduling and interest rate reductions for businesses exporting goods to affected areas, in order to reduce cash flow pressure in difficult times.
The immediate damage is clear. If the situation lasts, businesses will be under great pressure. Therefore, coordination between businesses and management agencies is needed to minimize risks" - a representative of VINAFRUIT emphasized.
