Export seafood orders are likely to flatten out from second quarter

Mr. Truong Dinh Hoe, General Secretary of Vietnam Association of Seafood Exporters and Producers.

Seafood exports in the first month of the year decreased quite deeply, apart from the cause of Tet, what other factors affected this result?

As expected, in January 2023, seafood exports dropped deeply, estimated at 600 million USD, down 31% year on year. Notably, many export products of Vietnam's seafood recorded a dramatic decrease such as catfish by 50%, shrimp by 46%, tuna by 32%.

Particularly, squid and octopus still maintained growth of 4% and other marine fish species of 6%.

January coincides with the Lunar New Year holiday affecting the import and export activities of businesses. Along with that, the impact of enterprises' lack of export orders has negatively hit the production and export of seafood in recent times.

Not only did it decrease in January of this year, but from the fourth quarter of 2022, the trend of seafood exports reversed to a negative growth rate of more than 9% and a deep decrease in all categories due to the impact of inflation in markets.

In January 2023, seafood exports still maintain a sharp decline following the trend of the last quarter plus the occasion of the Lunar New Year holiday. Notably, exports to major markets in January 2023 all fell severely, of which the US, China - Hong Kong and the EU recorded a decrease of 56%, 55% and 35%, respectively.

This result is not surprising for businesses because it was in the previous forecast.

What should seafood exporters do to overcome such difficulties?

In 2023, there are still many risks for export enterprises in general and seafood enterprises in particular. The four major export markets of Vietnamese seafood, namely the United States, Europe, China and Japan, are facing many challenges related to inflation and economic recession.

However, businesses can still hope in the Chinese market. The opening of China gives great hope for a recovery in demand not only in this market but also in other markets around the world, when tourism and trade are smooth. Therefore, this market will reveal prosperous signals from at least the second quarter of 2023. Therefore, it is necessary to focus on balancing declining exports in other markets. In addition, businesses can still be optimistic about potential markets such as Asia, the Middle East, etc.

To overcome difficulties, seafood enterprises need to ensure financial health to maintain stable production, and prepare raw materials to ensure supply sources. Moreover, businesses can take advantage of their own industry in terms of supply and market factors by capturing market information and forecasting. Besides, it is necessary to maintain the key labor force and production and to be ready for market recovery.

This is also a challenge for businesses amid the shortage, limitation, and delay which leads to inventory pressure on many orders. Both importers and exporters are also sharing the same difficulties so it is high time to shake hands and have bilateral interaction to seek opportunities as soon as the market bounces back.

In your opinion, do businesses need to shift production to develop the domestic market amid the export difficulties?

Given seafood, products, which are mainly export frozen products, there is greater demand for fresh products in the domestic market. Therefore, there should be specific enterprises focusing on domestic market consumption while seafood exporters should specialize in the production of frozen products to meet the demands of the export market.

Exporters need to pay attention to volatility indices such as market trends, the current inflation situation, which will certainly affect the price decrease compared to 2022. It is predicted that 2023 will be a challenging year for businesses in the European market so businesses should recognize all the challenges of this market to make timely adjustments to maintain production in the next stages of 2023.

From the above factors, how do you forecast the situation of seafood export this year?

The picture of seafood exports in the first months of the year will continue to be difficult especially since the world economy is forecasted to fall into a recession this year. However, for the consumer markets, seafood is still an essential food item and the demand will not drop too sharply. There will be adjustments in demand by product segment. Accordingly, the advantage will be tilted more toward moderately-priced goods

Especially, exporters and seafood enterprises are able to benefit thanks to the cooling down of global inflation along with the announcement of raising the reference interest rate by 25 basis points (0.25%) from the US Federal Reserve (Fed) on February 1, 2023 and the reopening of the Chinese market.

With the factors mentioned above, in my opinion, by the end of the first quarter of this year, seafood export orders will be stable, and businesses will accelerate exports in the second half of the year. Actually, the results will be as positive as in 2022.

Thank you very much!