Food firms proactively finding solutions

Tensions in the Red Sea have driven up shipping costs by 30-50 per cent, as well as prolonging transportation times by as much as 15 days, with negative consequences for Vietnamese food exporters.

Nguyen Dinh Tung, CEO of major fruit exporter Vina T&T based in Ho Chi Minh City’s Phu Nhuan district, said, “Longer transportation times are having the largest impact and negatively affecting the quality of our fruit. It used to take 30 days to transport a container, now it takes 45 days. Fruits such as grapefruit and coconut can stay fresh for up to 70 days, but several others cannot.”

Global Trading Connection Co., Ltd, specialises in exporting canned fruit juice and powdered coffee, and its CEO Nguyen Ngoc Luan revealed that besides the soaring transportation expenses, businesses are also facing a hike in energy fees and input material costs, with coffee experiencing a 30 per cent jump.

“Negotiating with our partners in the Middle East and Europe on price to cover the spike in input costs is proving difficult,” said Luan.

To reduce transportation costs, local firms and importers are scaling up efforts to bring costs down.

Chairman of GC Good JSC Nguyen Van Thu said, “Logistics accounts for a large share of the pricing structure of agricultural products. To mitigate the Red Sea situation, Vietnamese exporters must seek alternative routes such as the Cape of Good Hope, which requires higher costs and more time. This eats into our profit margins severely.”

As a result, GC Food is now attempting to tap into markets much less affected by the current conflicts, such as ASEAN and northeast Asia.

“We are determined to focus on things we can influence, such as expanding our coconut and aloe growing areas to optimise production costs,” added Thu.

Vietnam Investment Review