High shipping fees eat businesses’ profits

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VietnamNet English - 70 month(s) ago 10 readings

High shipping fees eat businesses’ profits

VietNamNet Bridge – Since the beginning of the year, Vietnamese import-export companies receive the notice on shipping fee and charge increases every month.

In January 2012, shipping firms raised the General Rate Increase (GRI) on the goods to the US to 400 dollars per TEU. In February and March, shipping firms announced the increase of the Terminal Handling Charges (THC) and fuel surcharge by 8 percent, applied to the destinations in Asia. In early April, the Vietnamese goods from Vietnam to Europe were told to bear higher GRI, at 400 dollars per TEU, the same rate applied to the goods to the US.

Shipping firms: raising fees to cover loss

In general, every 20 foot container to Europe now bears the freight of 1350 dollars. If counting on THC, the Bill of Lading, and other kinds of fee, the total cost would reach nearly 2000 dollars.

Vietnamese exporters, though mostly exporting goods under the mode of FOB, still have to pay a series of fees and surcharges, called local charge, which puts a heavy burden on them.

A representative of Saigon Palm, specializing in exporting bamboo made products, said that the export value is low, while the shipping fee is too high. A container of souvenir, for example, is valued at 10,000 dollars, while the shipping costs alone would cost 2000 dollars.

Import companies have suffered most, because they have to bear freight and other kinds of fee. An executive of HL Cargo, a forwarding joint venture, said that the freight to Europe has increased by 80 percent in comparison with the same period of the last year.

Meanwhile, Duong Quoc Chien, Director of CMA-CGM Vietnam, one of the big shipping firms in the world, has warned that the fees and surcharges would increase further in the time to come. Shipping firms tend to raise fees to get money to offset the loss they incurred in 2011. The higher fuel cost has also been cited to explain the fee increases.

Chien said that the freight would not increase sharply, but the fees and surcharges would increase.

Competitive market cannot help reduce fees

The Vietnam Shipowners’ Association said that only 8 percent of imports and exports are being carried by the domestic fleet. Meanwhile, the shipping market is being controlled by foreign firms.

The market opening market, plus the attractiveness of the import-export market, worth 200 billion dollars in 2011, both have prompted more foreign firms to jump into the Vietnamese market. However, this does not help create a healthy competition which allows reducing the fees.

It is obvious that foreign firms join hands to set up the fees and surcharges in the Vietnamese market. Meanwhile, an official of the Vietnam Maritime Bureau admitted that the competent agency cannot make intervention in the market, because the shipping agents of foreign firms in Vietnam only apply the fees stipulated by the parent groups.

Therefore, though the associations of seafood companies, cashew nut exporters and wooden furniture manufacturers repeatedly make complaints to the Ministries of Industry and Trade, and Transport, asking to find out the solutions to the continued shipping fee increases, state management agencies cannot do anything except the promise to consider the issue.

Do Xuan Quynh, Secretary General of the Vietnam Shipowners’ Association, said that in order to ease the reliance on foreign fleet, it is necessary to upgrade the capability of the domestic fleet. Vietnam shipping agents strive to handle up to 30 percent of imports and exports in the near future. However, Quynh said, the goal seems to be far away.

Source: TBKTSG

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