The conflict involving the United States, Israel, and Iran has not only intensified military flashpoints in the Middle East but also cast a shadow over strategic maritime routes such as the Strait of Hormuz and the Suez Canal–Red Sea corridor.

For a highly open economy like Vietnam, any shock would not be transmitted directly but through costs: oil prices, war risk insurance premiums, and particularly logistics, the lifeline of exports. While trade flows have not been widely disrupted, a “risk premium” is already being factored into individual contracts.

Logistics – the most sensitive bottleneck

Pham Quang Anh, General Director of Dony Garment Company, said the enterprise is closely monitoring shipments to Jordan, a market accounting for nearly 20% of its export turnover and stable since 2017.

Garment shipments from Vietnam to Jordan primarily transit through the Red Sea, a route directly affected if tensions escalate. During previous periods of instability, transit times extended from one month to three or four months, three to four times the normal duration. Freight rates for a 40-foot container rose from around USD 1,500 to as high as USD 5,000. War risk surcharges and limited vessel availability increased the risk of delayed deliveries.

“A delay of 15–20 days can mean missing a selling season; a delay of three to four months effectively means losing the season altogether,” he said. In the textile sector, characterized by short product life cycles and high seasonality, the greatest risk lies not in higher freight costs but in the disruption of customers’ business cycles.

Nevertheless, he observed that the market has become more adaptive. Whereas customers previously paused orders during instability, they now tend to maintain orders while adjusting volumes or delivery schedules.

Dony plans to ship a 40-foot container to Jordan within the next two weeks and is working closely with logistics partners to monitor developments. “Logistics remains the most concerning factor. In terms of demand, we hope tensions do not escalate into a broader war,” he said.

Associate Professor Nguyen Huu Huan noted that logistics represents the primary risk. Most exports to Europe and part of those to the United States pass through the Suez–Red Sea corridor. If vessels are rerouted or war surcharges increase significantly, logistics costs, typically accounting for 10–20% of product value, could rise by an additional 15–25%.

Under a scenario where tensions persist for six months, export turnover could decline by 2–4% compared to baseline projections due to reduced price competitiveness and delivery disruptions.

Industrial projects face schedule pressures

In the supporting industry sector, Le Mai Huu Lam, General Director of Cat Van Loi Company, said his firm is supplying equipment for a thermal power plant project in Saudi Arabia through a Japanese main contractor.

The first shipment was dispatched before the Lunar New Year and is currently in transit. Although the partner bears war insurance and additional surcharges, the primary concern is overall project timing. Industrial projects depend on synchronized installation and acceptance milestones; delays in one component can disrupt the entire construction schedule.

“If hostilities escalate, all plans may shift. Human safety remains the top priority, and project timelines will inevitably be affected,” he said. The second shipment is scheduled for late March, though potential delays and additional freight costs are under consideration.

While acknowledging risks, Mr. Lam views the Middle East, particularly Dubai (UAE) and Riyadh (Saudi Arabia), as high-potential markets due to robust infrastructure investment. The company plans trade promotion activities in Dubai in April and Saudi Arabia in October.

“Risk always accompanies opportunity. In a volatile world, enterprises that closely monitor developments and remain flexible can still find opportunities in rapidly developing markets,” he said.

Fruits and vegetables: When time becomes cost

Dang Phuc Nguyen, General Secretary of the Vietnam Fruit and Vegetable Association (Vinafruit), said Red Sea tensions affect not only direct shipments to Middle Eastern markets such as the UAE and Saudi Arabia but also indirectly impact Europe. Most Asia–Europe shipments pass through the Suez Canal and Red Sea. Heightened security risks have forced some carriers to reroute around the Cape of Good Hope, extending transit times by several days or even a week.

For fresh fruit, even minor delays can affect freshness, appearance, and selling price. Longer operation of refrigerated containers increases costs and quality risks, narrowing Vietnam’s price competitiveness.

Although exports to the Middle East and Europe account for less than 10% of total sector turnover, they are significant for market diversification. If logistics costs return to the elevated levels seen in 2024–2025, growth expectations may be difficult to achieve.

Mr. Nguyen noted that the challenge is sector-wide rather than size-specific. “The issue is not enterprise scale but product characteristics. Fresh fruit and vegetable exporters face the greatest pressure,” he said.

In an environment of geopolitical uncertainty, enterprises must adjust transport strategies, diversify markets, and strengthen preservation capabilities. However, if Red Sea tensions persist, cost and time pressures will remain substantial challenges for the fruit and vegetable sector.

Trade with the Middle East: Calm but cautious

A representative of an Israeli trading company operating in Ho Chi Minh City stated that shipments of cashew nuts and dried fruits to Ashdod Port have not experienced significant disruptions. Maritime schedules remain relatively stable; air freight adjustments are limited in scope. “The situation is localized, and civilian supply chains continue to operate,” the representative said.

Nevertheless, the company has recalculated delivery timelines, budgeted for surcharges, and discussed potential price adjustments with import partners. The risk has not materialized, but contingency measures are in place.

Analysts observe that Middle East tensions have not caused widespread disruption to global trade but have increased logistics costs due to rerouting and higher insurance premiums. Supply remains intact but more expensive. Diversified maritime networks and flexible rerouting capabilities have preserved trade flows. Enterprises and logistics providers are accepting higher costs to avoid trade interruptions.

Maintaining momentum in an unpredictable world

So far, there are no signs of widespread disruption. Enterprises continue exporting, and partners maintain contracts. However, the current “normal” state includes new contingency costs.

Reports of potential blockades of the Strait of Hormuz, through which roughly one-fifth of global oil supply transits, and warnings that tensions could extend to the Red Sea have heightened alert levels among international shipping lines. The Suez–Red Sea corridor, responsible for approximately 12% of global trade and up to 35% of container traffic, faces localized disruption risks if conflict escalates.

For Vietnam, this is not merely a geopolitical issue. In 2025, export turnover reached approximately USD 930 billion, with over USD 56 billion destined for the EU. A significant portion of shipments to Europe and the U.S. East Coast transits this corridor. Rerouting via the Cape of Good Hope would immediately increase costs and delivery times.

For a highly open economy, instability along strategic maritime corridors can quickly translate into tangible costs for each container. In this context, risk management capacity—from diversifying shipping routes and negotiating cost-sharing arrangements to increasing product value—will determine the ability to sustain order flows.

Red Sea tensions do not yet equate to crisis. However, in an increasingly unpredictable geopolitical environment, the challenge for Vietnamese exporters extends beyond securing orders to safeguarding profit margins and maintaining delivery reliability. These factors are essential to preserving market share and achieving long-term growth.

Source: Kinh te Sai Gon Online