Hanoi (VNA) – Vietnamese firms exporting to Europe and North America’s East Coast are being affected by Red Sea route changes, according to the Shinhan Securities Vietnam (SSV).

As per the company, listed seafood and textile companieswill experience minimal impact, with their transport costs accounting for lessthan 5% of the total operational ones. Meanwhile, the turmoil in the Red Sea – a crucialmaritime route connecting the Mediterranean to the Indian Ocean facilitating tradeflows from Europe to Asia – has led to a significant increase in transport fees,benefiting maritime transport businesses in the short term.

The ongoing tension in the area also supports an upwardtrajectory in oil prices, which has a positive impact on upstream, oil refining,and oil transport companies.

According to some exporters, a number of shipping companieshave announced higher costs for goods transportation to the US, the EU, andother countries from January 2024, citing the reason that the Red Seatension has affected the safety of many routes and forced them to divertroutes, which has subsequently led to longer delivery and higher expenses.

Large shipping firms like Yang Ming Line, One, EvergreenLine, HMM, and Maersk have informed exporters of additional charges as theyhave to divert Asia-Europe routes away from the Red Sea and the Suez Canal.

Tran Thanh Hai, Deputy Director of the Foreign Trade Agency at the Ministry ofIndustry and Trade (MoIT), said the Red Sea tension could raise the shippingcost for one cargo container destined for Europe by 1,000-2,000 USD, and thecommodities hit hardest include textiles-garments, footwear, wood products, andelectronic devices.

Therefore, the exporters using long routesneed to take timely response measures to avoid losses, he said.

To protect their interests, the MoIT has urged business andlogistics associations to keep a closer watch on the situation so that theirmembers stay updated with developments to ready production, export, andimport plans to avoid adverse impact.

They were also recommended to discusswith partners to extend goods preparation and delivery time if necessary,diversify supply sources to minimise impact on supply chains, and considerrail transport to have more transportation choices, Hai noted.

In particular, the MoIT advised businesses to includearticles on compensation and liability exemption in emergency cases whennegotiating and signing trade and transport contracts. They were also advised to buy insurance in anticipation of risks and losses during prolongedtransportation or unexpected incidents, and ready different transportationplans./.