The Drewry World Container Index, which tracks freight rates on 8 major container shipping routes, shows that the average cost of shipping a 40-foot container has more than doubled, from 1,900 USD five months ago to 4,200 USD today. International logistics costs continue to rise, putting greater pressure on businesses. Ho Chi Minh City's decision to waive port infrastructure fees provides a welcome bit of relief.
Viet Hoa Group manages approximately 13,000 containers imported or exported through Ho Chi Minh City's port system each year. A port infrastructure fee of 20 USD per 40-foot container has required the company to pay 260,000 USD annually. A 3-year fee waiver will save the company nearly 800,000 USD in logistics costs.
Duong Thanh Khuan, General Director of the Viet Hoa Group, said: "This will ease the difficulties for businesses. Businesses’ major burdens now include higher shipping costs, fuel prices, and logistics service costs due to political instability globally."
Ho Chi Minh City has 94,000 businesses that pay port infrastructure fees, generating about 92 million USD in annual revenue. Under the new policy, businesses will be fully exempt from port infrastructure, service, and public utility fees, reducing their logistics costs 0.5 to 0.8%. Economist Do Thien Anh Tuan, a lecturer at the Fulbright School of Public Policy and Management, said the 3-year fee waiver means the city will forgo around 286 million USD in budget revenue. However, it will cut costs for businesses and make the market more attractive.
"The city might collect less revenue, but it could make up for it through other sources. For example, if transport activity increases, the city could collect more revenue from value-added tax and corporate income tax as businesses grow. Many other indirect sources of revenue might also be channelled back into the city budget and contributed to the State budget," said Anh.
Last year, the Ho Chi Minh City port system handled more than 24 million TEUs, ranking 8th globally, and contributed to the city’s import-export turnover of 200 billion USD. The total value of commercial transactions through the city’s ports, including goods, logistics services, and related financial services, is an estimated 1 trillion USD annually.
The International Maritime Finance Ecosystem launched in late May as part of Ho Chi Minh City’s International Financial Centre aims to create a bridge to international sources of capital for Vietnamese maritime and financial businesses.
