Since the beginning of 2024, ocean freight rates have suddenly increased, including container transport fees, greatly affecting the import-export activities of businesses. Recently, foreign shipping lines have simultaneously increased port handling charges (THC) and various other fees, making it even more difficult for businesses.
Sudden increase in fees
In particular, KMTC has increased the THC fee from $126 to $138 for a 20-foot container since February 15. Heunga increased from $120 to $132; TSL increased from 3 million VND to 3.55 million VND; Yang Ming increased 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 Ho Chi Minh Plastic and Rubber Association – said that the new THC fee increase is not large, only a few hundred thousand dong per container. However, when combined with electricity and fuel costs, security fees charged by shipping lines, the overall cost increases significantly for businesses.
THC fees are much higher than the container handling fees that shipping lines pay to Vietnamese ports. Photo: THANH NHAN
According to Mr. Tran Quoc Manh, Vice Chairman of the Export Handicrafts Association, freight and transportation fees generally increase in a chain-like fashion, “if one increases, the others also increase.” While the manufacturing and export industry is facing difficulties and various pressures. “Normally, the importing company bears the freight and fees. When freight and fees increase, the number of imported goods decreases because the more goods are imported, the more losses are incurred. Therefore, the burden will fall on the manufacturing and export industry because importers often use this reason to pressure and reduce the price of exported goods,” explained Mr. Manh.
According to the owner of a logistics company based in Ho Chi Minh City, any additional increase in THC fees ranging from 12-15 USD for a 20-foot container and 20-25 USD for a 40-foot container does not have much impact on businesses that only export 1-2 containers per month, but significantly affects businesses that export from tens to hundreds of containers. “Various surcharges such as fuel fees, container balance fees, document fees… are all decided by shipping lines. In the near future, these fees may increase along with the THC fee. Whether customers accept it or not, they have no other choice. Only the functional agencies can control and stabilize logistics costs,” said the owner of this company.
Meanwhile, Mrs. Chu Thi Kieu Lien, Head of the Hanoi Branch of T&M Forwarding Company (a shipping line agent), said that most shipping lines have increased the THC fee and sharply increased transportation prices since two months ago, pushing logistics costs to a high level and causing dissatisfaction among businesses. “For logistics agencies like T&M Forwarding, we often proactively notify customers of the fee increase very early 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 notify in advance but wait until the goods are on board to announce an additional fee increase of several hundred USD per container, especially for shipping lines to European routes, pushing customers into a passive position. In order to retain customers, agents have to bear the additional fee increase,” Ms. Lien expressed the reality.
Tight control of various surcharges
In the face of arbitrary fee increases by shipping lines, which greatly affect businesses, the Vietnam Shippers’ Council (VNSC) recently submitted a proposal to the Government and relevant ministries and departments to strengthen the management of various 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 autonomously collected dozens of different fees and charges for goods of import-export businesses. Moreover, shipping lines continuously increase these fees and surcharges without sufficient basis, grounds, and 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 to adjust the prices of services for customs clearance, use of bridges, ports, buoys, container handling, tug services took effect from February 15. The noteworthy factor is that this fee increase only applies to Vietnam, while other countries in the region have not made any move to increase the THC fee.
In addition, in terms of absolute value, the 10%-20% increase in shipping line THC fees is three times higher than the rate of adjustment of container handling prices at Vietnamese ports. Especially, shipping lines only inform about price changes 15 days before the adjustment period and do not require any checks, explanations of the factors that make up the fee or any constraints in any reports.
According to Mr. Le Duy Hiep, Chairman of the Vietnam Logistics Service Business Association (VLA), currently, foreign shipping lines publicly announce price changes 15 days before the adjustment period, without requiring any checks, explanations of the factors that make up the fee or any constraints from regulations. This has caused dissatisfaction among businesses, but it has not been fully resolved thus far. Therefore, Mr. Hiep believes that the state needs to tighten the management of surcharges imposed by foreign shipping lines. It must study the 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 and surcharge fees by foreign shipping lines. It is possible to supplement the charging of surcharges on top of the price of container cargo transportation services in the list of commodities and services subject to price declaration for completion and issuance. To avoid arbitrary price increases and unfair collection, shipping lines should be required to report on the structure of THC fees. In case these surcharges generate excessive profits, special consumption tax policies need to be implemented by the authorities.
Freight rates in February slightly decrease compared to January
Mr. Tran Van Linh, Chairman of the Board of Directors of Thuan Phuoc Fisheries and Trading Company (Da Nang City), said that container shipping rates in February have decreased compared to January because shipping lines are competing to attract customers. However, rates have not decreased significantly since 2023 due to the ongoing conflicts in the Red Sea.
Mr. Dang Dinh Long, General Director of Mega A Logistics Company, also confirmed that the shipping rate for 40-foot containers from Vietnam to Europe has decreased from $5,500 to $3,500. From $3,500 to $2,500 for shipping to the United States. The main reason is the low volume of import and export goods, so shipping lines have to reduce prices to attract customers. “It is forecasted that during the upcoming low season, the Asian routes to Europe and America may further decrease rates. However, by June, when the market enters the back-to-school and year-end shopping season, the volume of goods will increase, so shipping rates may increase again,” Mr. Long speculated.
