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Shipping charges provoke bafflement

May 03, 2014

A representative of Singapore cargo company said that the freight rate for a 20-foot container between HCMC and the American West is US$1,700 – 1,800, while the rate to the American East ranges between US$2,600 – 2,700, up by 10 – 15% against early 2014 and 7 – 8% year-on-year./p>

In fact, shippers have reduced freight rates and charges now and then. Yet price reduction lasted for only one month while price hikes extended from two or three months. Occasionally, shipping agents have increased rates again at the second week of the following month, the representative said./p>

Most Vietnamese key export items such as woodwork, garments and textiles, farm produce and seafood are subject to free on board (FOB) terms of payment, meaning that buyers have to pay for shipping charges and goods insurance fees. When shipping charges increase, it is certainly that importers will force Vietnamese exporters to lower product prices./p>

Following many shippers’ announcements of freight rate increase early this month, the Vietnam Association of Seafood Exporters and Producers (VASEP) has recorded its members’ feedback on the impacts of the new fees. According to members’ calculation, the export price of each kilo of fish fillet will have to shoulder an additional 10 to 15 U.S. cents if shipping charges rise by US$700-1,000 a container. As export contracts were signed several months ago, the sudden shipping fee hike would push them to a disadvantageous position and deeply hurt their earnings./p>

Duong Ngoc Minh, chairman of Hung Vuong Corporation, said that as Hung Vuong and its affiliate Agifish export around 500 containers each month, shippers have offered them freight charges at nearly 20% lower than other seafood exporters with fewer containers. Despite the benefit, Hung Vuong still incurred a loss of VND51.5 billion in the last quarter of 2013. Explaining the business result, Hung Vuong blamed unexpected fee hikes as the main cause of the loss. Of them, sale costs and shipping charges surged by VND27.7 billion, or 19% year-on-year./p>

Helpless

According to the Vietnam Shippers’ Council, foreign firms have prevailed in the international shipping market. Meanwhile, local enterprises have just won back the domestic shipping market after the Ministry of Transport had banned foreign shippers from operating on domestic routers over the past year. Phan Thong, general secretary of the council, noted that foreigners could be able to set shipping charges at will because they own large market shares. In this context, experts in the industry have cast doubt on a collusion among shippers. Notifications of freight rate hikes have always been sent to customers and applied at the same time. In addition, they may raise different kinds of charges to similar rates./p>

However, it is not easy to get the truth in this case. Most of foreign shippers have opened only agents and representative offices in Vietnam, so charging policies are decided by parent companies. The agents also cannot decide preferential policies for large customers that ship hundreds of containers each month. The deputy general director of a European shipping firm in HCMC said a parent company usually imposes shipping charges on each region or area, and agents and representative offices must conform to the rates./p>

Elaborating on probes into or interventions in possible collusion among shippers, a representative of the Competition Management Department under the Ministry of Industry and Trade said that bringing all these hidden issues is a tough job as shipping agents in Vietnam are supposed to materialize sales policies formulated by parent companies abroad./p>

(Eleven Myanmar)