Vietnamese exporters squeezed by Suez blockage

The owner of a seafood exporting company in the southern province of An Giang is waiting for a five-container ship to pass through the canal on its way to France.

However, the ongoing congestion will not allow the ship to exit the canal until Friday or Saturday, delaying the shipment by two weeks, exposing the company to fines of 0.3-0.5 percent of the order value.

This is the first major delivery of the company this year and the owner fears major damage, given the high value of the shipment. He is hoping that the buyer will acknowledge the force majeure circumstance and not impose any fine.

Many Vietnamese logistics companies are in the same boat after the six-day blockage caused by the mega ship Ever Given disrupted the global supply chain by jamming the shortest shipping route between Europe and Asia.

Even though the ship was moved on Monday, Le Duy Hiep, chairman of the Vietnam Logistics Business Association, said most companies were still seeing their shipments delayed.

Imports from Europe and the Americas to Vietnam are also being put off, he said.

"Nearly 400 ships, including those from Vietnam, are queued up at the canal. It will take days to clear all the ships, causing damage to both logistics companies and exporters," he said.

Europe is one of Vietnam’s biggest seafood export markets with a value of more than $1 billion last year. The resurgence of Covid-19 in some countries there and the Suez blockage is causing major difficulties for Vietnamese exporters.

Truong Dinh Hoe, general secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), said that Vietnam and many other countries are short of containers for exports and face surging freight rates, and the Suez blockage could make this go even higher.

Tran Thanh Hai, deputy head of the export-import department under the Ministry of Industry and Trade, said that the blockage is a wakeup call for Vietnamese businesses. He urged them to be more careful and prepare for worst-case scenarios.

For example, transporting goods by train from Vietnam to Germany costs slightly higher than ships, but takes 15-20 days less, and businesses should consider this an alternative option, he said.

Businesses should also buy insurance and think of it as part of their regular expenses instead of taking chances, he added.