Tensions in the Red Sea drive up shipping costs in Vietnam

This situation is causing many importers to worry about potential significant losses due to the rising exchange rates.

According to a spokesperson from the Vietnam Steel Association (VSA), steel producers, who import most of their raw materials, are struggling with low domestic demand and declining exports, along with rising costs. This trend is increasing the inclination towards local suppliers in the sector.

While the strengthening dollar increases the incomes of exporters, it also poses challenges as they contend with inputs they need to import for production.

A manager from the Vietnam Logistics Association notes that the depreciation of the dong against the dollar and tensions in the Red Sea have doubled or tripled shipping rates from Vietnam to Europe and the East Coast of the United States. This is leading to increased costs in the sector and decreasing profit margins.

In the long term, producers are focusing on developing strategies to reduce costs and decrease dependence on imported raw materials and supplies. This may involve turning to local suppliers and exploring alternative financial instruments.