Ocean freight rates are surging strongly again, while shipping schedules are continuously disrupted, pushing exports into cost and delivery pressures. This is the time when enterprises must retain orders by managing logistics as a strategic factor, proactively forecasting rates, controlling transportation, and incorporating these elements into negotiations.

Following a phase of once worrying about a shortage of orders, many exporting enterprises are shifting to a new pressure originating from logistics. Ocean freight rates on routes to the US, Canada, and the EU skyrocketed in the first half of June, after having already begun to escalate about a month and a half prior. At the same time, global geopolitical instability continues to make shipping schedules more difficult to forecast, increasing delivery risks.

Freight rates heat up again, pressure piles onto exports

The clearest development is on the US West Coast route: freight rates to Los Angeles for the June 15–30 period rose to around 6,500 USD/FCL, up 27% compared to the first half of the month and up 90% compared to the end of May. Compared to before February 28, the increase has reached up to 232%.

The US East Coast route also recorded a sharp increase. Freight rates to New York in the second half of June rose to around 7,900 USD/FCL, up 23% compared to the first half of the month and 70% compared to the end of May. Compared to before February 28, the increase reached 182%.

Not only North America, but routes to Canada also escalated. Freight rates to Toronto/Montreal in the second half of June rose to around 10,050 USD/FCL, up 17% compared to the first half of the month, 73% compared to the end of May, and 114% compared to before February 28.

Moving to Europe, the pressure is equally apparent. Freight rates to Rotterdam, Hamburg, and Felixstowe in early June stood at around 4,700 USD/FCL, and it is projected that the second half of the month could see an additional increase of over 1,000 USD/FCL. This development demonstrates that cost pressures are spreading from the trans-Pacific route to the Asia-Europe axis as well, as shipping schedules lengthen, routing via the Cape of Good Hope and Middle East risks continue to disrupt the transportation chain.

The current new round of rate hikes is creating "double pressure," as escalating logistics costs directly erode the profits of exporting enterprises.

The above figures indicate that logistics costs are rising faster than the forecasts of many exporting enterprises. For contracts with pre-determined fixed prices, the incurred costs can hardly be fully transferred to customers, causing profit margins to contract visibly. This pressure is particularly heavier for industries with low added value or those heavily reliant on refrigerated transport.

In its latest assessment, the Vietnam Association of Seafood Exporters and Producers (VASEP) argued that the current round of rate hikes is creating "double pressure," as escalating logistics costs directly erode profits. This impact is manifested most clearly in contracts signed previously and orders that lack sufficient added value to absorb transportation costs.

VASEP also noted that unstable shipping schedules could affect delivery progress, cold storage retention times, and commitments to customers. For frozen seafood, the risk comprises not only freight rates but also costs of reefer containers, yard storage, and shipping schedule changes. The risk of disputes also rises if delivery is delayed, particularly on long routes like the US, EU, and Canada.

Faced with the above realities, according to this association, prospects in the coming weeks will depend on the cooling down of tensions in the Middle East, the capacity of shipping lines to restore stable schedules, and the actual purchasing power of the US market after the early importing phase. Nevertheless, as the peak season arrives early and shipping capacity remains tight, freight rate levels are unlikely to decrease rapidly in the short term.

That means exporting enterprises need to prepare for a scenario where logistics costs continue to fluctuate in the coming months. The reality is increasingly clear that the export equation lies not only in production capacity but depends progressively on logistics structures and how cash flows operate in cross-border trade models.

“The FOB price currently accounts for only about 20–25% of the final selling price, while warehousing and advertising costs can reach up to 50% of revenue.” - Mr. Huynh Le Dai Thang, Director of Nghia Son Company

In such a picture, especially with cross-border business models, the cash flow of exporting enterprises becomes more complex as logistics costs account for an increasingly large proportion. From the perspective of the wooden furniture industry, Mr. Huynh Le Dai Thang, Director of Nghia Son Company, stated that the FOB price (the price of goods delivered on board at the export port, excluding international freight and insurance) currently accounts for only about 20–25% of the final selling price, while warehousing and advertising costs can reach up to 50% of revenue.

“Many enterprises therefore record increased revenue but declining profits due to being unable to control the rate of cost ‘consumption’,” Mr. Thang said.

Logistics must be considered a strategic factor

The above developments serve as an indicator that logistics is gradually becoming a part of the competitive structure rather than merely a supporting service. Enterprises that well control delivery chains will possess a distinct advantage in retaining customers and optimizing profit margins.

In tandem with transportation costs, legal risks in international logistics are receiving special attention from the exporting business community. Many disputes originate not from the goods but from insufficiently tight contract clauses, focusing on liability for compensation, exemptions from liability, insurance, claims, applicable law, and dispute resolution methods.

In reality, situations also arise such as consignees refusing goods, container demurrage costs, force majeure events, or disputes related to bills of lading.

This is the time when logistics needs to be viewed as a strategic factor in exports, instead of merely an ultimate incurred cost.

Faced with these risks, lawyer Nguyen Thi Hong Ngan, Head of the Legal Department of VLA, Director of Tam Chung Law Firm Company Limited (VILEX), emphasized that logistics contracts are becoming a vital risk management tool for exporting enterprises.

Ms. Ngan stated that many current disputes stem from unclear service scopes and inadequately defined responsibilities of the parties, along with issues regarding bills of lading, limits of liability, delayed delivery, incurred costs, applicable law, and arbitration clauses.

Confronting that issue, experts advise exporting enterprises to meticulously review service scopes, responsibilities, limits of liability, and clauses regarding costs, insurance, claims, and dispute resolution.

“Logistics contracts are becoming a vital risk management tool for exporting enterprises.” - Lawyer Nguyen Thi Hong Ngan, Head of the Legal Department of VLA, Director of Tam Chung Law Firm Company Limited (VILEX)

From the seafood industry perspective, VASEP also recommended that this is the time when logistics needs to be viewed as a strategic factor in exports, instead of merely an ultimate incurred cost.

“Proactively forecasting rates, controlling delivery schedules, negotiating transport clauses, and coordinating tightly with customers will decide the capacity to retain orders. This is also the key factor to safeguard profit margins and mitigate risks in a phase when the shipping market still harbors much volatility,” the VASEP side clearly stated.

The aforementioned fluctuations reflect a notable shift in export activities. If previously enterprises primarily competed on production costs and capacity, currently the capacity to retain orders relies increasingly on delivery chain management capacity.

As logistics costs rise rapidly, shipping schedules disrupt, and legal risks intensify, the equation of retaining orders for exporting enterprises becomes increasingly unpredictable. Variables no longer sit completely within control; logistics has become an important factor in the competitive structure. Enterprises that adapt in time to this “front” will possess more opportunities to retain orders and maintain positions in the global supply chain.

Source: Vnbusiness