Shipping firms hit by big waves

Foreign shipping firms colluding with each other to hike fares from $700 to 2,000 per container recently has put importers and exporters into a pickle, particularly food and agricultural exporters.

“Big firms usually sign longer-term contracts with shipping firms coinciding with the time they deliver goods to their partners, so recent fare hike did not hurt their profits,” said Nguyen Trong Quy, a Uni Global Logistics representative. Uni Global Logistics is one of best sea freight forwarders in Vietnam with good relationships with international carriers like Kline, MOL, Cosco and MAERSK.

With a dominant market share, foreign shipping firms are getting the upper hand in the sea transport market.

In this situation, the Ministry of Industry and Trade has joined hands with the Ministry of Transport and Vietnam Shipowners Association (VNSC) to discuss fee revision negotiations with foreign shipping firms.

“This is extremely hard since foreign shipping firms are operating in Vietnam mainly via their agents, final decisions, therefore, depend on ship owners,” said VNSC’s general secretary Phan Thong.

Uni Global legal expert Do Hoang Vinh Du said it was unlikely foreign shipping firms would pull down shipping rates.

“The best cure in current context is local firms teaming up to create strength in negotiations. Besides, it is important to develop a powerful local ship fleet to compete with foreign players,” said Du.

Phan Thanh Quang, a Japan-backed Sagawa Express Vietnam representative, said fare hikes would affect import-export firms’ business plans.

Quang argued Vietnam mostly exported raw agricultural, forest and fisheries products with low added value and high transport fares would drive up their costs significantly, sometimes equal to product actual value.

“If we invest in strong ships running to some key import export markets, we can still hold the initiative with shipping fares, from there breaking the current monopoly of foreign shipping firms, which was evidenced in their recent fare hikes,” said Quang.