The impacts of China’s latest coronavirus lockdowns are rippling through Vietnam’s business sector due to global supply chain disruptions associated with the Chinese government’s zero-COVID strategy.
Many Vietnamese enterprises are searching for ways to reduce their dependence on the Chinese market, a long-standing issue that has become increasingly worse throughout the pandemic.
T.V.H., general director of a truck manufacturing and assembly company with a factory in Cu Chi District, Ho Chi Minh City, is looking forward to receiving a shipment of auto parts and components that has been delayed for over a week due to congestion in Chinese ports.
The queues of container ships outside major Chinese ports are lengthening by the day as COVID-19 outbreaks in manufacturing export hubs, including Shenzhen and Dongguan, continue to paralyze factories.
Prior to the current lockdowns, it typically took about 35 days for H.’s company to receive shipments sent by sea.
Currently, that time has increased to 45 days.
Despite the delays, shipping remains H.’s only option given current interruptions in road and train shipping.
“We’ve had two shipments delayed so far this year, and that has forced us to renegotiate with our partners, which is not easy,” H. said, adding that both shipments included about 20 containers with a combined value of over US$1 million.
“Had it not been for [our customers’] understanding, we’d have compensated them for the contract.”
For transporting goods from China to Europe by cargo ships of 15,000-16,000 TEUs (a measurement used in the shipping industry to described 20-foot containers), shipping times have increased from 55 to 100 days, according to Vu Ngoc Son, chairman of Hai An Transport and Loading Company.
While China’s main ports remain open, congestion at these ports only worsens, and many container ships are re-routing in order to avoid delays.
Gridlock at Yantian International Container Terminals in Shenzhen is the worst, according to H.
The situation is affecting supply prices, according to Nguyen Van Thong, director of a company specializing in importing components for internal combustion engines.
“We are still finding ways to import goods, but shipping times are certainly much longer, and the price [for different goods] is also on the rise,” Thong said.
Higher sea freight fees
Not only are enterprises concerned about scarce supplies, but they are also worried about inflated shipping costs.
Prior to the COVID-19 pandemic, the price of shipping a 40-foot container from a Chinese seaport to Cat Lai Port in Ho Chi Minh City was about $1,100.
That price has now ballooned to the $2,500-3,400 range.
Sending goods in the opposite direction, from Cat Lai Port to China, can cost as much as $9,000 – five to six times higher than in the past.
In the worst-case scenario, a shipment may be returned from China due to COVID-19, doubling the cost.