Many challenges for shrimp export in the second half of the year

Processing shrimp for export. TH

Exports are affected by many factors

Assessing the shrimp export situation this year, Mr. Do Ngoc Tai, Vice Chairman of the Vietnam Association of Seafood Exporters and Producers (VASEP), Chairman of the VASEP Shrimp Committee, said that export turnover increased slightly compared to the same period of previous year is a positive sign, however the shrimp industry continues to face many challenges when the world economic situation shows no signs of recovery, inflation is high, and the war has no end.

For the US market, in the first five months of this year, Vietnamese shrimp exports to the US reached US $229 million, up 1% over the same period in 2023. Shrimp exports to the US only increased sharply in January, in contrast to February and April and in May it dropped sharply again.

In this market, inflation is high, housing, gasoline and gas costs have increased. In addition, shipping rates increased dramatically by 40% from May due to the war in the Middle East and China collecting empty containers to reserve goods for export to the US before the new tax period. Vietnamese shrimp also has to compete strongly in price with Ecuadorian, Indian, and Indonesian shrimp in the US market.

According to forecasts of businesses, the demand for importing Vietnamese shrimp from the US may increase slightly in the third quarter of this year when importers increase purchases to serve the needs of year-end festivals.

In particular, the US Department of Commerce is investigating anti-subsidy against Vietnamese shrimp. It is expected that in August 2024 there will be final results and in October the international arbitration center will vote.

Better than the US market, Vietnamese shrimp exports to the European market (EU) in the first five months of 2024 reached US $165 million, an increase of 8% over the same period. The highlight is that shrimp exports to the EU, after decreasing in February and March, recovered and increased again in April and May.

Shrimp consumption in the EU market in the first quarter of the year was very slow because this market was greatly affected by the prolonged Russia-Ukraine war, the EURO depreciated against the USD, and ship freight increased suddenly because 60% of ship must travel by detours. China collects empty containers for export to the US.

In addition, Vietnamese shrimp will have to compete more strongly with rival sources in this market such as India and Ecuador because these two sources have difficulty with high tariffs in the US market, so prices will be reduced to increase export volume to Europe.

In the coming months, the EU market's demand for shrimp imports is expected to increase slightly until the end of the year. This market's demand for imported value-added goods will grow better than traditional products because inventories have decreased significantly.

Difficulties from potential markets

The Chinese market is considered a potential market for Vietnamese shrimp exporters, with the advantage of proximity and low logistics costs. However, according to analysis of businesses, exporting to the market is facing difficulties because it has to compete with shrimp from many countries.

According to VASEP, in the first five months of this year, Vietnamese shrimp exports to China and Hong Kong reached US $260 million, up 21% over the same period. Export growth to this market gradually decreased from January to April. In May, there were a sign of large decrease. The main reason is that Vietnam's shrimp prices are higher than those of rival suppliers.

Although the cumulative number to China and Hong Kong markets increased, exports to this market have shown signs of decreasing in recent months. It is expected that shrimp exports to this market in the second quarter will hardly grow strongly. The reason is that China's demand for frozen shrimp slows down. In this market, Vietnam also has to compete strongly with Ecuadorian shrimp.

It is known that starting from May 1, 2024, China will reduce import tax to 0% for Ecuadorian shrimp under the bilateral Free Trade Agreement. In addition, shrimp suppliers to China also face strong competition from increased domestic shrimp production, putting pressure on imported shrimp prices.

In the following months until the end of the year, Ecuador, India and Indonesia will focus more on the Chinese market due to high tariffs imposed by the US, so Vietnamese shrimp exported to China will have more difficulty in terms of price, especially black tiger shrimp whole animal, whole card.

According to experts, Vietnamese shrimp exports continue to face many challenges such as falling export prices, strong competitive pressure from rival suppliers, sharp increases in transportation costs and input prices, and cadastral conflicts, world economic recession.

Shrimp export businesses have been trying to map out strategies for development such as increasing quality and making a difference for their products in the market. Besides, applying science and technology to both production and farming stages to increase efficiency and reduce product costs.