Hanoi (VNA) ꦛ– Some Vietnamese shipping companies operating in the Asian market are predicted to benefit from a hike in container shipping costs due to the impacts of the COVID-19 pandemic.

The COVID-19 crisis and supply chain disruptions have had heavy impacts on the shipping industry, causing a significant drop in maritime transport output. Serious congestion and disruptions have pushed shipping freight rates to record highs. Notably, the freight rates of container shipping services have increased four times compared to the pre-pandemic level. According to SSI Securities Corporation, some Vietnamese shipping companies operating in the Asian market is likely to benefit from these developments. Analysis reports from SSI shows that the shipping industry recorded profit growth of 106 percent in the first six months of 2021, thanks to strong import-export activities in the past time and the increasing demand for logistics services such as warehousing or inland transport.

Shipping freight rates up 2-3 times

Freight rates increased by 4-8 times within a year for long-haul routes such as Asia-Europe and Asia-North America. Specifically, the cost for transporting a 40ft container from Shanghai (China) to Rotterdam (the Netherlands) hit nearly 12,000 USD on June 25, 554 percent higher than last year’s figure. Meanwhile, freights for short routes or intra-regional routes recorded a more modest increase. For example, the average shipping freight on the Shanghai (China) - Busan (the Public of Korea) route surged by 81 percent over the same period. The complicated developments of the COVID-19 pandemic since 2020 has been the main reason behind the high cost of container shipping as shipping companies have reduced their capacity. These resulted in severe congestion at ports, increasing trade imbalance, shortage of empty containers, and partial closure of big ports. There are also a number of other reasons, such higher fuel costs and an increase in size of container ships. Exports from Vietnam to Europe and North America were hardest hit by the situation, SSI said. According to customs data, the US and EU markets account for 30 percent and 15 percent of Vietnam's total export turnover, respectively. SSI's report shows that most exporters have suffered a twofold or threefold rise in transportation costs in the two markets in the past year, with low-value sectors such as seafood and agricultural products, being mostly affected.

Bright outlook for stocks of shipping firms

Regarding the logistics industry, Hoang Viet Phuong, Director of SSI Investment Analysis and Consultancy Centre, said that Vietnamese companies are not involved in intercontinental shipping. However, some shipping companies operating in the Asian market will benefit from these developments. Analysis from SSI shows that the total net profit of shipping companies on the stock market has increased to 32 billion VND (over 1.39 million USD) in the first quarter of 2021 from a loss of 145 billion VND in the same period last year, and the total revenue also increased 13 percent year-on-year. Meanwhile, mixed logistics companies also saw a strong improvement in both revenues and net profits in the first quarter, up 87 percent and 62 percent respectively over the same period. Phuong attributed this to the stable import-export growth plus the high demand for storage when ports constantly experienced the shortage of containers, and higher shipping freight rates. According to SSI, with its logistics network nationwide, Gemadept Joint Stock Company (GMD) will get many benefits from the maritime shipping industry’s growth. The company posted a year-on-year surge of 40.2 percent in its after-tax profit growth in the first three months of the year. Gemalink port of GMD is expected to bring profit to the firm right in the first year of operation. In addition, GMD's ports in Hai Phong has seen recovery, while Nam Dinh Vu port is expected to operate at full capacity in the second half of this year. These elements are hoped to promote GMD’s growth, SSI said. SSI estimates that GMD's pre-tax profits will hit 762 billion VND in 2021, and 1.06 trillion VND in 2022, year-on-year increases of 49 percent and 39 percent, respectively./.