Since the beginning of 2024, sea freight rates have suddenly increased, including container transportation fees, greatly affecting the import-export activities of businesses. Recently, foreign shipping lines have simultaneously increased terminal handling charges (THC) and various other fees, making it even more difficult for businesses.
Simultaneous fee increases
Specifically, KMTC has increased THC fees from 126 USD to 138 USD for a 20-foot container since February 15. Heunga has increased fees from 120 USD to 132 USD; TSL has increased fees from 3 million VND to 3.55 million VND; Yang Ming has increased fees from 2.536 million VND to 3.042 million VND since February 20…
Mr. Nguyen Quoc Anh, Director of Duc Minh Rubber Company, Chairman of the Plastic Rubber Association in Ho Chi Minh City, said that the new THC fee increase is not too significant, only a few hundred thousand dong per container. However, when combined with electricity, fuel costs, security fees of shipping lines, etc., the overall cost of businesses increases significantly.
The THC fee increase is much higher than the container loading and unloading fees that shipping lines pay to Vietnamese ports. Photo: THANH NHAN |
According to Mr. Tran Quoc Manh, Vice Chairman of the Association of Export Handicraft, Cargo and Transport Fees, in the shipping industry, “if one shipping line increases fees, others will follow suit”. Meanwhile, manufacturing and export businesses are facing difficulties and various pressures.
“Normally, the importer bears the freight and fees. When the freight and fees increase, the importer will decrease the quantity of imported goods because the more they import, the more losses they suffer. Therefore, the burden will fall on manufacturing and exporting businesses, as importers often use this reason to pressurize and reduce export prices” – explained Mr. Manh.
According to a logistics business owner based in Ho Chi Minh City, the additional THC fees ranging from 12-15 USD/20 feet and 20-25 USD/40 feet do not have a significant impact on businesses that only export 1-2 containers per month, but they have a considerable impact on businesses that export hundreds to thousands of containers.
“Various surcharges, such as fuel charges, container balance fees, document fees… are all determined by shipping lines. In the future, THC fees may also increase. Customers have no choice but to bear these fees. The only hope is for regulatory authorities to control and stabilize logistics costs” – the business owner said.
Meanwhile, Ms. Chu Thi Kieu Lien, Head of the Hanoi branch of T&M Forwarding Company (a shipping line agent), said that currently, most shipping lines have increased THC fees in addition to the significant increases in transportation rates since two months ago, pushing logistics costs to high levels, which is why businesses are speaking out.
“For logistics agents like T&M Forwarding, we usually proactively notify customers of the fee hikes well in advance so that they can adjust their input costs, purchase prices, and selling prices.
However, there are still a few shipping lines that not only do not give advance notice but wait until the cargo is on board before announcing several hundred dollars increase per container, especially for lines to Europe, putting customers in a passive position. To retain customers, agents have to bear these additional fees” – Ms. Lien explained the reality.
Tightly control additional fees
In response to the arbitrary fee increases by foreign shipping lines, which greatly affect businesses, the Vietnam Shippers’ Council (VNSC) has recently sent a written recommendation to the Government and relevant departments and agencies to strengthen the management of surcharges imposed by foreign shipping lines.
In this document, Mr. Phan Thong, Secretary-General of VNSC, stated that for many years, foreign shipping lines have been arbitrarily charging dozens of types of fees and surcharges for goods of import-export businesses. Moreover, these shipping lines continuously increase these fees and surcharges without sufficient basis, grounds, or compliance with state management regulations.
Mr. Phan Thong also added that the increase in THC fees by shipping lines occurred immediately after Circular 39/2023/TT of the Ministry of Transport decided to adjust the prices of services such as loading and unloading containers, using bridges, ports, rafts, lashing, effective from February 15. It is noteworthy that this fee increase only applies to Vietnam, while other countries in the region have not made any moves to increase THC fees.
Furthermore, in absolute terms, the 10%-20% increase in THC fees by shipping lines is three times higher than the adjustment in container loading and unloading fees at Vietnamese ports. Especially, shipping lines only announce price changes 15 days before the adjustment period, without inspection or explanation of the factors constituting these fees, surcharges, or any reports or binding requirements.
According to Mr. Le Duy Hiep, Chairman of the Vietnam Logistics Service Business Association (VLA), currently, foreign shipping lines publicly change prices 15 days before the adjustment period, without inspection or explanation of the factors constituting these fees, surcharges, or any binding requirements from competent authorities.
This has caused great dissatisfaction among businesses, but it has not been fully resolved. Therefore, Mr. Hiep believes that the state needs to tighten the management of surcharges imposed by foreign shipping lines. It must study legal aspects as well as international practices.
Mr. Phan Thong also proposed that relevant agencies take strong and decisive measures to control the adjustment of THC fees and surcharges by foreign shipping lines. It may be necessary to add surcharges to the service price of shipping goods by sea to the list of declared goods and services subject to price declaration in order to improve the management mechanism and promulgate regulations.
To avoid arbitrary price increases and profiteering, shipping lines should be required to report on the structure of THC fees. In cases where these surcharges generate excessive profits, authorities should apply special consumption tax policies.
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Transportation rates in February slightly decreased compared to January Mr. Tran Van Linh, Chairman of the Board of Directors of Thuan Phuoc Seafood and Trade Joint Stock Company (Da Nang City), said that container transportation rates in February decreased compared to January because shipping lines competed to attract customers, but they did not decrease to the level of 2023 due to the ongoing conflict in the Red Sea. Mr. Dang Dinh Long, CEO of Mega A Logistics Company, confirmed that the transportation rate for a 40-foot container from Vietnam to Europe has decreased from 5,500 USD to 3,500 USD; from 3,500 USD to 2,500 USD for a 40-foot container transported to the United States. The primary reason is the low volume of imported and exported goods, so shipping lines have to lower prices to attract customers. “It is predicted that in the future, transportation rates for the Asia-Europe and Asia-America routes may further decrease due to the low season. However, starting from June, when the market enters the back-to-school season and end-of-year shopping season, and the volume of goods increases, transportation rates may increase again” – Mr. Long expressed. |
Reported by the journalist team
