Logistics businesses must face uncertainty head-on

Amid rising tensions in the Middle East, Vietnamese logistics companies are trying to navigate a raft of new issues.

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Ngo Khac Le, deputy secretary general of the Vietnam Logistics Business Association, talked to VIR’s Bich Thuy about possible solutions to the situation.How are Vietnamese logistics businesses being affected by the current conflict in the Middle East?

It is creating significant pressure on international supply chains and transportation operations. Soaring freight costs, extended transit times, and risks of delayed orders are becoming major challenges for the business community.

For Vietnamese businesses, they are facing three major layers of risk: energy, logistics, and foreign exchange. Firstly, the risk of disruption to strategic shipping routes lead to higher oil and fuel prices, consequently escalating transportation costs.

Secondly, shipping companies may reroute, apply surcharges, extend transit times, increasing logistics costs and impacting businesses’ delivery schedules.

Thirdly, in the context of geopolitical instability, the US dollar tends to strengthen, exposing import businesses to exchange rate risks as a large portion of international freight, fuel, and insurance costs are paid in USD.

The Vietnam Logistics Business Association conducted a survey from March 3-11. Accordingly, 73.4 per cent said they regularly monitor or update themselves daily on geopolitical developments.

One of the notable findings is that almost 90 per cent of businesses reported experiencing moderate to extremely severe impacts on their operations. Specifically, 51 per cent are at Level 4-5, which is the severe and crisis threshold, requiring a rapid policy response.