Exporters complain as cost for containers skyrockets

Friday, Jan 15, 2021 08:49

Containers at a southern port in Viet Nam. The cost to hire shipping containers has skyrocketed to nearly ten times its pre-pandemic level due to short supply and surge in demand. — VGP Photo

The cost to hire shipping containers has skyrocketed to nearly ten times its pre-pandemic level, according to export businesses and trade agencies.

During the last three months, the cost to hire a 40-foot container increased to US$8,000, even to $10,000 in certain cases, from less than $1,000 at the beginning of 2020. It has sharply driven up expenses for exporters and raised concerns over a lack of transparency and inadequate price management of containers, said businesses during a meeting in Ha Noi with the Viet Nam Maritime Administration (VMA).

A wide range of businesses across all sectors have been hit by the price hike, which exporters claimed was "nonsensical" while demanding shipping companies take steps to rein it in and be more transparent regarding their pricing.

General Secretary of the Viet Nam Plastics Association (VPA) Huynh Thi My said the price hike has severely hampered export activities of plastic makers, resulting in significantly lower export volume and in one instance effectively shut down an Indian plastic firm in the Viet Nam - Singapore Industrial Zone in northern Bac Ninh Province for the whole of December last year.

A representative from the firm said it was forced to shutter operations because of the price hike, which has brought its operational cost to an unsustainable level. Other plastic makers also reported a 50 per cent higher inventory compared to the same period last year, even after they bit the bullet and shipped orders at a loss-incurring cost.

"We [the VPA] demanded the VMA and other trade authorities launch investigations into and conduct thorough reviews on shipping companies' pricing policies," said My.

The VPA also called for a review of current regulations, pointing to a lack of a control mechanisms and transparency over the price to hire containers in Viet Nam. Measures must be taken so avoid future price hikes.

Meanwhile, shipping companies cited difficulties caused by the pandemic, a spike in exports to the EU and US markets and longer time required to free up containers for hire. They said the situation is not likely to improve until at least March, or in worst-case scenario well into the year's second quarter.

Deputy head of the VMA Hoang Hong Giang said the administration has required shipping companies to publish their prices and organised meetings with exporters.

"The reason behind the recent price increase for container-for-rent was a matter of supply and demand. The administration, however, insisted that shipping companies must be transparent with pricing policies. We have also considered commandeering thousands of unclaimed containers in ports across the country as a solution to the shortage," he said.

Tran Thanh Hai, deputy head of import and export from the Ministry of Trade and Industry, said the ministry is to report the matter to the Prime Minister's Office. Meanwhile, he urged exporters to look into alternatives such as railway transport to EU markets and to renegotiate delivery dates with buyers. — VNS

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