Food firms reject new export orders on delivery costs

By Vien Thong   January 18, 2022 | 09:33 pm PT
Food firms reject new export orders on delivery costs
Farmers in Thanh An commune in southern Can Tho City harvest the winter-spring rice crop in March 2020. Photo by VnExpress/Thanh Tran
Higher logistics costs, longer delivery time and labor shortage have forced many food producers to turn down new export orders, according to the Food and Foodstuff Association of HCMC.

"Foreign partners have placed many orders, but our association members are very careful about accepting them," Ly Kim Chi, its head, said Tuesday at a seminar held to discuss the difficulties faced by importers and exporters and their resolution to facilitate trade amid Covid-19.

Food businesses are now in the busiest period of the year, Tet (Lunar New Year) which falls in early February, and tons of goods have been shipped abroad this month, indicating a new year of good exports she said.

However, many have had to refuse new orders because of increasing prices of inputs, shortage of seasonal workers and, especially, higher freight costs, she said.

"Prices of inputs have increased by 30-50 percent," but the biggest challenge has been logistics costs.

Shipping a container to the U.S. used to cost only around US$2,000, but after two years of the pandemic it currently stands at $10,000-15,000.

Longer transport times are also a problem for food exporters, increasing to three months for delivery to the U.S. and Europe from the earlier one month at ports in, but now the transport time is up to three months.

"Our goods have a shelf life of only one year, but it takes up to three months to ship, which greatly shortens the use time," Chi said.

Other industries such as wood processing also said logistics costs had become unaffordable.

Huynh Van Cuong, vice chairman of the Logistics Association of HCMC, said sea freight costs have surged by three to more than 10 times in the last two years.

A United Nations report in November 2021 said high freight rates are threatening the global recovery and could increase global import prices by 11 percent and consumer prices by 1.5 percent by 2023.

Experts have warned sea freight rates would not return to normal before 2023.

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