Amidst tensions in the Red Sea, MoIT advises exporters to have backup plans and insurance coverage.
Red Sea In World Map :1 Plans And Insurance Coverage
HÀ NI The Ministry of Industry and Trade issued a warning that the ongoing tension in the Red Sea has increased freight rates and raised the likelihood of delays.
MoIT asked Vietnamese exporters and industries to closely monitor the Red Sea situation, make backup plans for import-export operations,
maintain regular communication with overseas partners, and diversify sources to safeguard the supply chain in the ministry’s most recent statement. It was also advised to investigate other modes of transportation, such as rail.
The ministry also recommended that exporters include provisions for compensation and an emergency release from liability. To reduce financial risks, insurance policies should be obtained in the interim. Companies were requested to get in touch with the MoIT should they need help.
Since December 20, over 170 ships have been diverted southward toward Africa, with about 35 ships experiencing delays in the Red Sea, as per Flexport, a digital freight forwarding company.
Red Sea Bordering Countries
It is anticipated that the rerouting will result in a significant increase in fuel and crew costs and a 10- to 14-day extension of the shipping time.
In view of these developments, companies that import and export should be prepared for potential risks. A container traveling through Europe might end up costing an extra $1,000 to $2,000 due to the unrest in the Red Sea. Furniture, footwear, and textile industries could be particularly impacted.
The Vietnam Ship Agents and Brokers Association’s (Visaba) Maritime and Logistics Market News states that container
Ship owners are attempting to save money by avoiding circumnavigating Africa and paying significant or unusual extra charges. The Mediterranean Shipping Company (MSC) intends to impose an unprecedented surcharge on the cost of shipping a single container from Europe to Asia.
Similarly, in order to pay for the expenses of loading or unloading at ports in the Red Sea, the shipping company CMA CGM is thinking of charging $2,700 per container.
Red Sea Map
Shipping companies had planned to increase freight rates before the Lunar New Year in February—in some cases, even doubling them—even before the Red Sea crisis.
Peak season surcharges (PSS) and war risk surcharges are currently applied to these shipments. These costs are expected to increase further as the quantity of delayed or redirected The number of ships keeps rising.
Some shipping companies have announced the suspension of cargo transportation through the Red Sea, with cargo being rerouted around the Horn of Africa, in response to recent incidents of attacks on cargo ships in the Gulf of Aden and the Red Sea.
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