Vietnamese exporters face numerous challenges as the market undergoes change.
According to the Vietnam Association of Seafood Exporters and Producers (VASEP), up until the middle of March 2015, total seafood exports reached $1 billion, a decrease of 22 per cent compared to the same period last year. Thus, total seafood exports in the first quarter of this year are estimated to reach $1.2 billion, down by 23 per cent compared to 2014.
Seafood exports in the first quarter are typically lower than the previous quarter and the lowest for the year as demand tends to increase from the second quarter onwards, gradually rising until the end of the year to meet orders for occasions such as Christmas and the New Year.
However, in 2014, exports went in the opposite direction. The market has dropped significantly as importers consolidate their reserves for fear of lack of supply, especially for shrimp. In 2015, export is expected to return to normal orbit.
However, the sharp decline in the value of seafood in the first quarter of 2015 should be concerning. The industry faces upheaval with changes in the world market such as fluctuations in exchange rates, import prices and tariff barriers combining with domestic regulation and the financial difficulties of local enterprises.
Due to the shrimp harvest season and lack of infrastructure for storage, sales of Indian shrimp have increased, leading to a decline in price on international markets by $2/kg compared to last year. Local firms must store their product to avoid losses. Consequently, shrimp exports fell 30 per cent in the first two months.
Pangasius export also declined by 18 per cent due to the depreciation of the Euro, which led to a lower demand from the European market. The price of pangasius is down by between 5 and 10 per cent. Tuna turnover declined by 13.5 per cent compared to 2014.
The biggest drop is in the three major markets of the US, the EU and Japan. Seafood exports to the EU decreased by 10 per cent while Japan fell by 14.5 per cent. Meanwhile, these two markets accounted for 18 per cent and 14 per cent, respectively, of Vietnamese seafood exports.
A lot of Vietnamese exporters to the EU market faces a problem when their customers want lower prices while domestic materials are not meeting demand and the price of importing raw materials is quite high.
In addition, most local businesses choose the US dollar as the currency of international trade. The value of the US dollar has increased while exchange rates to VND remain the same. As a result, profits for Vietnamese enterprises is lower than other countries such as Thailand, India and Indonesia.