The sea transport sector has recovered strongly after the crisis in 2008-2010. However, as supply exceeds demand, seaport developers have rushed to cut service fees. 

A representative from the Hai Phong Port said that the service fees have been cut by 20 percent or even 30 percent for containers.

Meanwhile, a report by the Vietnam Port Association showed that the storage and container goods handling service fees have dropped dramatically. 

While the minimum cost for handling container goods is $65-70 per TEU, the Cai Mep – Thi Vai Port charges $30 per 20 feet container and $50 per 40 feet container and offers a lot of preferences.

VPA pointed out that this is the major reason which has caused losses for seaports. The fee war, in the long term, will weaken Vietnam’s seaports and force port developers to bankruptcy.

Freight in chaos

A paradox exists that while Vietnamese port service providers incur losses because they have to provide services at below production costs, foreign shipping firms can make fat profits through many charges and surcharges.

According to the Vietnam Maritime Bureau, only 10-20 percent of the total imports/exports are carried by the domestic fleet. Vietnamese ships mostly run on short-distance routes in South East Asia and North East Asia, while there is no route directly to Europe and the US, though they are Vietnam’s largest export markets.

There are about 40 operating foreign shipping firms in Vietnam, but they handle 88 percent of Vietnam’s total imports/exports and 100 percent of the container exports to Europe and North America. 

According to VASEP, seafood export companies now bear more than 20 types of fees and surcharges imposed by foreign shipping firms. 

Nam said while the value of the export products is not high, the sharp 70 percent increase of the shipping fee has pushed the cost up by 2-3 times.

The Vietnam Leather and Footwear Association also said the surcharges its member companies have to pay account for one percent of total exports.

Meanwhile, the Vietnam Goods Owners Association reported that the surcharges collected by foreign shipping firms account for one percent of the total export turnover of the seafood industry. 

As such, the enterprises in the industry have to pay $110-115 million a year, or VND2.2-3 trillion, for each kind of fee.

Nguyen Hoai Nam, VASEP’s deputy secretary, said in June 2014, a 20 feet dry container to the US was charged $2,300, while seafood companies had to pay $3,900 in March 2015, or 70 percent higher. 

DDDN