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BUSINESS REPORT










































         Navigating



         global tensions




         Vietnam’s trade activities and its logistics sector face significant
         headwinds from the ongoing tensions in the Red Sea.

         | By VIET AN

               ne  of  the  main  driving  forces   according to the United Nations Conference   nam’s import-export strategy to 2030,” he
               behind Vietnam’s economic devel-  on  Trade  and  Development  (UNCTAD),   emphasized. “Logistics costs have skyrock-
         O opment  has  been  the  significant   saw around 12-15 per cent of global trade   eted due to disrupted shipping schedules,
         growth in its import-export activities. Of   pass through in 2023.    with delays of up to 10-12 days as cargo
         countries to have established commercial   Given these constant attacks on cargo   ships must make detours around the Cape
         relations with Vietnam, EU member states   ships, UNCTAD estimates that trade com-  of Good Hope at the tip of Africa. Insurance
         and  the  US  have  consistently  remained   ing via the Suez Canal has fallen by 42 per   costs have also increased due to the height-
         its largest trading partners.      cent over the last two months.     ened  risk  of  attacks,  and  costs  for  late
           Data from the General Department of   This  in  turn  has  impacted  Vietnam’s   cargo delivery are being imposed. It is esti-
         Vietnam Customs put bilateral trade between   trade activities, since the Suez Canal is a   mated that logistics costs in general have
         Vietnam  and  the  US  at  $110.8  billion  in   crucial maritime link to Europe and the   increased by an additional 20-30 per cent,
         2023 and with the EU at $58.5 billion.   East Coast of the US from Southeast Asia.   for  both  free-on-board  (FOB)  and  cost,
           In recent times, however, trade activities   According  to  Associate  Professor   insurance and freight (CIF).”
         to these and other key markets have encoun-  Nguyen  Thuong  Lang,  a  senior  lecturer   The  World  Container  Index  (WCI),
         tered significant difficulties due to tensions   in the Institute of Trade and International   compiled by Drewry, reached $3,964 for a
         in the Red Sea.                    Economics  at  the  National  Economics   40 ft container at the end of January - an
                                            University, large volumes of Vietnamese   increase of over 280 per cent compared to
         ‘SHOCKING RISE IN SHIPPING COSTS’   goods  are  transported  through  the  Red   the  end  of  November  -  before  settling
           Attacks  on  cargo  ships  have  become   Sea  region.  Though  detailed  figures  are   down somewhat to around $3,650 at the
         increasingly  frequent  in  recent  months,   not available, estimates put it at around   end of February.
         seriously disrupting the transportation of   $90  billion,  accounting  for  about  one-  Associate Professor Lang said that, in
         goods via the Red Sea; the only route into   eighth of the country’s total trade turnover.   the worst-case scenario, increased shipping
         and  out  of  the  Suez  Canal  and  which,   “These are important markets in Viet-  costs  could  lead  to  higher  selling  prices,


         24  |  VIETNAM ECONOMIC TIMES  |  MARCH 2024                                                 en.vneconomy.vn
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