Viet Nam is having a tough time. Early success in containing Covid-19 has been undone by a surge of cases. Ho Chi Minh City is under lockdown and numerous production lines are suspended or scaled back significantly.
If you think this means you’ll see fewer Nike trainers or Samsung phones in the shops you’re half-right. In recent years, Hanoi has worked hard to turn the country away from being a sweatshop for fast fashion. Increasingly it’s seen as a destination of choice for high-tech manufacturing and R&D.
It’s also a major shipping hub.
A lack of dockside crews, changes to schedules and internal movement restrictions has seen ships queuing up to enter Viet Nam ports. This is affecting global shipping as vessels find themselves in the wrong place at the wrong time. Add in problems in Malaysia, China and other East Asian ports and the current cost increases and delays can only get worse. Freightos, which tracks container costs, suggests the cost of shipping a standard 40 foot container from Asia to Europe has doubled since the Delta Variant began spreading in April 2021. Costs are still rising.
Bypassing this bottleneck could see more cargo put on aircraft. As passenger numbers plummeted, so demand for freight rose. Vietnam Airlines capitalised on this shift by converting five aircraft to carry freight, and now earns more from from shipping things than people. Other airlines are following suit, and a new “cargo only” player is expected to arrive in early 2022.
Of course, putting cargo on airplanes could undermine any claims to “green” credentials. Air freight has far higher CO2 and other emissions than sea, which would need to be offset.
Hanoi isn’t alone in having Covid related problems. Most Asia-Pacific ports are affected by lockdowns, restricted movements or other consequences of the virus. So while Viet Nam’s target of achieving “herd immunity” through aggressive vaccination by year’s end is welcome, other nations need to follow suit.
It looks certain Viet Nam will experience lockdowns and disruptions from Covid throughout the rest of the year. Hopefully by year’s end, Hanoi can bring a more stability to global trade.