HANOI — A meeting convened in Hanoi brought together business leaders, Vietnam Maritime Administration officials, and representatives from the Ministry of Industry and Trade (MoIT) to deliberate on the ongoing challenges and potential solutions regarding the slowdown in global transport through the Red Sea. Trần Thanh Hải, Deputy Director of the Import-Export Department at MoIT, highlighted the strategic importance of the Red Sea and the Suez Canal as essential maritime routes facilitating shipping between European ports, the East Coast of North America, and various destinations in South Asia, the East Coast of Africa, and the Pacific. This route accounts for about 12 percent of global maritime traffic, underscoring its critical role in international trade.
The meeting addressed the crisis precipitated by conflicts in the Middle East, prompting shipping companies to reroute their vessels around the Cape of Good Hope, thus extending transit times by 10-15 days. The redirection has adversely affected Vietnam’s trade, particularly with European and North American markets. In 2023, trade turnover with these regions constituted 28.4 percent of Vietnam’s total import-export value, amounting to US$71.14 billion with Europe and $122.3 billion with North America. Participants discussed the immediate repercussions of the crisis, including heightened transportation costs, a shortage of empty containers, extended delivery times, and challenges in meeting import-export commitments. Additionally, the increase in transportation and oil prices is expected to exert upward pressure on the cost of goods, potentially destabilizing economies and impeding global economic recovery efforts.
Data from the Vietnam Maritime Administration revealed that ship freight rates have surged. Notably, container shipping rates to the United States and Canada experienced significant hikes in January 2024 compared to the previous month. The escalation in freight rates reflects broader concerns over rising logistics costs impacting global supply chains. Furthermore, according to real-time shipping data from the PortWatch platform, a collaboration between the International Monetary Fund (IMF) and the University of Oxford, there was a 37 percent decline in cargo volume through the Suez Canal by mid-January 2024. Conversely, cargo volumes via the Cape of Good Hope witnessed a 54 percent increase during the same period.
In response to these challenges, MoIT has circulated advisories to trade associations, logistics firms, and import-export companies, outlining strategies to mitigate the impacts of the Red Sea disruption. The meeting generated a consensus on the need for concerted efforts to stabilize freight rates and transportation costs, advocate for alternative routing strategies, diversify supply sources, secure insurance contracts, and enhance collaboration within the business community. Officials and business representatives shared insights, identified challenges, and proposed solutions to navigate the current crisis effectively. Hải emphasized the importance of timely and accurate information gathering to forecast potential impacts and devise appropriate strategies, thereby minimizing adverse effects on Vietnamese enterprises.
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