Garment
firm Dony’s shipment left a Ho Chi Minh City port in December and only arrived
in the Middle East a few days ago. The
sea trip, which usually takes 28-30 days, took three months, the company's CEO Pham
Quang Anh said.
"Our
goods were sent to Singapore for consolidation and have been sitting there
because the shipping company delayed its departure to wait for the rough sea to
calm down. We do not know yet when the customers will receive the shipment."
By "rough sea" he was
referring to the conflicts plaguing the Red Sea for the past three months.
Besides,
freight rates have skyrocketed to US$5,300 for a 40-foot container from $1,400
at the end of last year.
Transport
costs from Vietnam to Europe have also increased, with freight to Hamburg,
Germany, nearly tripling between December 2023 and January 2024, according to
the Vietnam Maritime Administration.
Meanwhile,
the Singapore-Rotterdam shipping route now takes 36 days instead of the usual
26 as cargo ships have to take a detour around the southern tip of Africa. And the shipping disruption is expected to
worsen from the second quarter onwards, financial services provider HSBC
forecast in a recent report.
By then,
all exports to the Middle East and Europe, including major ones like coffee and
smartphones, will be affected, the report said.
At the
12th Ocean Dialogue last Friday, Permanent Deputy Minister of Foreign Affairs
Nguyen Minh Vu too said that the increased costs and disruptions resulting from
the Red Sea tensions would cut into Vietnamese exports’ competitiveness.
Dr Irfan
Ulhaq, a lecturer in logistics and supply chain management at RMIT Vietnam,
said: "The conflict has increased insurance and fuel costs, adding
financial pressure on Vietnamese exporters and potentially affecting their
global competitiveness."
Furthermore,
industries reliant on timely supply chains and perishable goods are especially
susceptible to shipping disruptions, he pointed out.
"Delays
in importing raw materials and components can significantly impede
production."
His
colleague, Dr. Majo George, concurred adding that the impact of the Red Sea tensions would be complex and multifaceted.
According
to the two experts from RMIT, businesses have to reassess their supply chain
and explore safer, albeit costlier, shipping routes.
They
might even consider moving production closer to target markets or use AI and
blockchain technologies to improve supply chain management, the experts said.
For the time being many exporters have
resorted to air transport, leading to large volumes of air cargo from Vietnam
to Europe in January.