The Skyrocketing Cost of Ocean Freight, Making Shrimp Export Difficult

Current Ocean Freight update

The COVID-19 pandemic has seriously affected the logistics industry. From the level of USD 4,000 per FCL 40 foot from Vietnam to USA last year, this year Vietnam suppliers are competing with each other to get a booking at USD 12,000-13,000 per container and they hardly can get more than one booking per time.

And the nightmare of logistic disruption seems not to end soon, because so far only the USA market has started resuming their consumption thanks to their vaccination program.

The Vietnam suppliers are asking the government to step in to control the monopoly from some shipping lines, as well as from the feed suppliers. Besides, they offer two options, FOB or CFR, so clients can have more options to select.

Their efforts are helping a bit in the order situation, as clients can realise the price in FOB is not much higher than last year, even though packaging cost increases 15-25%, labour cost increases 10%, feed increases 20-30%.

But the low margin has scared the farmers, due to many negatives impact of Covid 19 and shrimp specialists who were talking about supply surplus demand recently, and they did not farm a lot.

Updated the Vannamei price

Now with the flood of orders from the USA for the summer, all of the big factories in Vietnam have full orders till October, with a high price and no raw materials.

The latest prices for Vietnam vannamei has increased this week from VND 6,000-8,000/kg for size 40/70, and VND 5,000-7,000/kg for size 80/100. It is at the same price level in mid April, when the peak seasons had not started yet, and it is completely abnormal compared to the last 10 years.

From 50-60 Mts/ day landing ten days ago, this week is hardly 5-10 Mts/day landing to each big factory, with the main sizes of vannamei is 50/70, and Black tiger is 20/25. Pressure is getting harder on suppliers, and they refuse to accept new inquiries for prompt shipment.

In the meantime, the price for medium size and small size of Indonesia and India vannamei is relatively stable same as last week. But there is a trend price increase for big size HO 40 and bigger. Compared to last week has increased around Rp3000/Kg ($0,21/KG) for Java area. This big size if mainly for food service, the majority of product is PTO from 26/30 – 16/20. The increased price is in Java because the majority of the shrimp pond are located in Java.

Expect there is another big landing of raw material at the end of June, another in mid July, then the peak season is starting off-peak. Farmers will put post-larvae for sub-crop at the end of June.