Vietnamese companies are reporting higher logistics, insurance and raw material expenses due to escalating Middle East tensions, prompting revisions to financial plans, pricing and delivery schedules for forthcoming orders.
Recalculating prices and delivery timelines
According to General Director of Dony Garment Co. Pham Quang Anh, Jordan makes up almost 20% of his company’s export revenue, with most shipments transiting the Red Sea. Containers are still rolling out on time with zero cancellations so far, but he’s staring down possible 15-to-20-day delays that could leave retailers high and dry during peak shopping seasons. If disruptions persist for months, the impact would extend to customers’ entire business cycle.
Cat Van Loi Co. already shipped its first load of gear and parts for a big thermal power plant in Saudi Arabia and is pushing ahead with the rest in stages. Even with phased contracts, the company warned that sharp hikes in freight surcharges and longer shipping times are threatening to tank the whole project efficiency.
Should current orders proceed without major interruption, greater risks loom for contracts slated for signing in the second and third quarters. Numerous enterprises and industry associations said companies are panic-buying raw materials right now to dodge shortages or missed deadlines, which is sucking up huge amounts of working capital fast.
For the fruit and vegetable sector, General Secretary of the Vietnam Fruit and Vegetables Association Dang Phuc Nguyen analysed that rerouting vessels away from the Red Sea has lengthened shipping times by many days, raising costs for refrigerated containers and cargo insurance.
Associations representing apparel, wood processing and food industries said they are tracking movements in freight and marine insurance rates. Prolonged high transport costs could erode the price competitiveness of Vietnamese exports.
Suspension of tours to several Middle Eastern destinations
On March 2, several travel companies in Ho Chi Minh City announced the temporary halts to tour packages involving certain Middle Eastern spots. At the same time, they have activated emergency responses for groups already there, including those transiting through Dubai.
The Middle East has been blowing up in popularity with Vietnamese vacationers lately, especially the Dubai-Abu Dhabi-Egypt combo routes. Amid rising tensions, loads of customers are begging to push trips back, cancel outright or get their money back. Tour operators are stuck trying to keep travellers safe while dealing with additional costs and contractual commitments arising from itinerary changes./.
