Tuna industry continues to face transportation costs  increase

Shipping costs are higher than ever since the outbreak of the Covid-19 pandemic, which has pushed up transportation costs since late last year. Currently, the shutdown of some of the world’s busiest ports due to the impact of the pandemic, particularly in China, has caused an even greater delay in global trade. The tuna industry is struggling and shipping tuna products to consumer markets has become expensive for all parties.

The closure of Yantian harbor, Yantian, China, the third busiest gateway in the world, due to the Covid-19 pandemic that broke out in May has had a ripple effect. Although the port reopened in July, the supply chain remains congested. The port of Ningbo, China was also closed on August 16 after a worker tested positive for the SARS-CoV-2 virus, but the port reopened in phases a few days later. Last week, 41 ships were moored at the port and port authorities are still dealing with a backlog of cargo. In 2020, the port handled 28.72 million TEUs (20ft equivalent units) and is a key location for shipments to Europe and North America.

Cat Lai Port, the largest port in Vietnam in Ho Chi Minh City, was also temporarily closed in early August due to the impact of the epidemic. The port returned to normal operations on August 11, and the proportion of unhandled containers increased to 85%. However, Ho Chi Minh City is still applying social distancing measures, restricting movement and increasing the number of infections, which continues to affect the operation of Cat Lai port.

 Container price increased 5 times

The temporary closure of ports has put pressure on already exorbitant freight rates. The tuna industry mainly transports canned products in 20ft containers, although sometimes 40ft containers are also used. Because of the high freight rates, a CFR (freight-inclusive) buyer may find the final product’s price so inflated that he finds it too expensive to sell to the consumer, and may delay your purchase.

Recently, the delivery price of a container of canned tuna from Bangkok to the US is still 3-4 times higher than last year. Currently, the minimum shipping cost for a container from Bangkok to the US is 10,000 USD, so the freight for 1 carton of 48 cans of tuna weighing 5oz will be about 5 USD. While last year, the price of 1 carton of such canned tuna was only about 1 USD.

The price of transporting 20ft of goods in Ho Chi Minh has also nearly doubled, from $2,872 in May to $4,875 in August. Freight rates from Asia to South America have increased from $2,500 to $12,000/ containers. This has put pressure on the competitiveness of Thai canners in Asia, while Ecuadorian canners have increased their competitiveness as they can ship canned tuna. Flat box will load to many different countries in South America. In the first quarter of 2021, Ecuador’s canned tuna exports to South American countries increased by 21% year-on-year.

The price of transport 20ft of goods in Ho Chi Minh has also nearly doubled, from $2,872 in May to $4,875 in August. Freight rates from Asia to South America have increased from $2,500 to $12,000/container. This has put pressure on the competition of Thai canners in Asia, while Ecuadorian canners have increased their competition as they can ship canned tuna. Flat box will load to many different countries in South America. In the first quarter of 2021, Ecuador’s canned tuna exports to South American countries increased by 21% year-on-year.According to the HARPEX shipping index, global 20ft container prices have increased fivefold in the past 1 year. The index was at 627 points last August and is now 467% higher, or 3,554 points, its highest level in decades.

Freightos, which provides a global shipping-only price index (FBX) for 40ft of goods (FEUs), shows that high consumer demand for imports has pushed up trans-Pacific freight rates. record high. On August 20, 2021, the freight rate for 1 40ft container from China/East Asia to North America was $10,024, while last year was $1,913.

The tuna industry will continue to face high transportation costs in the coming months. Congestion at ports and lack of containers have caused bottlenecks in global trade while growing demand for containerized goods are contributing factors to the current situation. Top US ports are reporting record 20ft container imports. The gateway between Asia and the US, the Port of Los Angeles and Long Beach, reported a 20ft container volume in July alone of 469,369 units.

(Source: http://vasep.com.vn/)