Red Sea Tensions: Support for Containerized Cargo Transport to Europe and the Americas

Amid the sharp rise in freight rates for containerized goods bound for Europe and the Americas, the Ministry of Transport has issued an official document directing the Vietnam Maritime Administration to provide immediate support to businesses.

Accordingly, the Ministry of Transport requires the specialized maritime state management authority to lead and coordinate with relevant agencies and units to ensure smooth seaport operations nationwide. At the same time, they must create favorable conditions for the transport of import and export cargo while promptly researching and implementing measures to enhance the operational efficiency of maritime infrastructure.

The Vietnam Maritime Administration has also been tasked with expediting port entry, exit, and cargo handling procedures for vessels carrying import and export goods, particularly container ships heading to the Americas and Europe. They are urged to work immediately with shipping lines operating routes to Europe and the Americas to encourage and attract them to maintain routes, allocate more vessel space, and reposition empty containers back to Vietnam to meet freight demand.

The Ministry of Transport instructed the Vietnam Maritime Administration to research mechanism policies to incentivize container carriers to open new routes to Vietnam, while urgently continuing to streamline and cut administrative procedures, especially those related to vessel operations.

According to stats on the Container Freight Rate Index by Drewry (an independent maritime research firm providing maritime market insights), container shipping rates from Asia to Europe and the Americas in the first week of January 2024 experienced massive volatility, jumping roughly 60% compared to late 2023 and up 25% year-over-year.

Currently, rate levels sit approximately 88% higher than pre-COVID-19 pandemic levels and are about 1–2% lower than the 10-year historical average.

Regarding trade routes, in addition to surging transport costs, blank sailings and route cancellations have emerged. According to Drewry's report across major global maritime routes—including Transpacific, Transatlantic, Asia-Northern Europe, and Mediterranean—78 out of 650 scheduled sailings were canceled between the second week of January 2024 and mid-February 2024, representing a cancellation rate of 12%.

For its part, the Vietnam Maritime Administration noted that under normal circumstances, the shipping route from Asia to Europe passes through the Red Sea and the Suez Canal, serving as the shortest and most cost-effective path.

However, since late 2023, escalating conflict in the Red Sea region has forced ocean carriers to reroute away from the Suez Canal, diverting vessels around the Cape of Good Hope instead. This detour extends transit times by 10 to 14 days, incurs substantial additional operating expenses, drives up freight rates, and risks causing container shortages.

According to bnews.vn