U.S. trade with Vietnam is on the rise – in particular, imports from Vietnam to the U.S. is rising, a result of low-cost labor, increased infrastructure development and trade disputes between the U.S. and China. Vietnam continues to be a big manufacturing hub for various commodities exported to the U.S. China’s Pearl River Delta, one of the most successful factory centers for many of the world’s manufacturing companies has become too costly due to rising labor costs and increasingly complex regulatory issues.
Headlines such as this are catching everyone’s attention, and for good reason:
Labor Costs and Productivity
As of the end of 2018, Vietnam’s labor cost was roughly 50% lower than that of China standing at approximately $2.73 per hour compared with China’s $5.51 per hour.
Top Commodity Imports from Vietnam to the U.S.
Vietnam is booming and imports from Vietnam jumped 33.4% in the first 6 months of 2019 compared with the same period last year.
Requirements for Exporting from the USA to Japan
Depending on the commodity or commodities you are exporting to Japan, you will need to supply the buyer and/or the bank with the following:
Commercial Invoice (CI),
Packing List (PL),
Certificate of Origin (COO),
USDA Phytosanitary Certificate or Veterinary Export Health Certificate,
USDA Food Safety and Inspection Service Certification (FSIS),
Ocean or House Bill of Lading or Airway Bill,
Inspection, Verification or Testing Certificate by an independent third party such as SGS, Bureau Veritas, Intertek, Cotecna, or other,
and any other documentary requirements of the buyer, Japanese Customs, US Customs and/or the Bank if there is an L/C involved.
Logistics and Supply Chain Infrastructure
Vietnam’s top ports of loading are: Hai Phong, Da Nang, Qui Nhon, and Ho Chi Minh City.
Northern Vietnam: Hai Phong and Vung Ang are the major ports of Northern Vietnam. Northern Vietnam is the hub for electronics, automobiles and precision machinery factories.
Central Vietnam: Quy Nhon and Da Nang ports are the major ports of Central Vietnam, most of the cargo exported from this region are coming from Mekong Delta and western Vietnam and headed for Myanmar, Thailand, Laos and Cambodia. This region’s infrastructure is developing quickly as it attracts high-tech industries.
Southern Vietnam: Ho Chi Minh city is the economic center of Vietnam, hosting the country’s best national universities and research facilities as well as the largest international airport in the country.
There are two major port terminals within the Ho Chi Minh port complex:
Cai Mep handles most of the cargo being exported from Dong Nai and Binh Duong, which are two of Vietnam’s major manufacturing hubs. Cai Mep is a deep water port, which allows for direct vessels to major ports in the U.S. and Europe.
Cat Lai is the second container terminal in Ho Chi Minh City’s port area. Cat Lai is frequently used for shipping domestic cargo to/from areas North of Ho Chi Minh city. Cat Lai still lacks a deep-water port, which limits direct vessels going to major ports in the U.S. and Europe. This port is mainly used for cargo going to other Asian ports.
The U.S.’s top trading ports with Vietnam are: Long Beach/Los Angeles, Dallas, Chicago, Newark/New York, Savannah, Seattle/Tacoma, Norfolk and Oakland.
Freight Costs from Vietnam to the U.S.
Ocean Freight costs for full containers Vietnam to the U.S. are comparable to ocean freight costs from China to the U.S. The cost difference is roughly 5-10% as of September 10, 2019. Transit times from Ho Chi Minh to Long Beach are 17-25 days which are slightly longer than Shanghai to Long Beach which ranges from 14-18 days.
Air Freight costs from Vietnam to the U.S. are roughly 5-10% higher than China to the U.S., but as traffic increases between Vietnam and the U.S., the available number of flights will most likely increase as well. Air Freight transit times Vietnam to the U.S. are comparable to other Southeast Asian countries
Risks
Risks definitely do exist in Vietnam including the potential for additional tariffs with the U.S. on various commodities due to a perception of potential currency manipulation per the U.S. Treasury’s May 2019 Macroeconomic report. Vietnam has a long way to go to reach China’s highly efficient logistics and supply chain infrastructure (they need to increase their port handling capacity, improve inland waterways and road and rail networks). Additionally, Vietnam’s labor is now scarce due to an increase in Foreign Direct Investment (FDI) in building out factories and a shortage of skilled workers and the learning curve for quality manufacturing is still at it’s infancy. Pundits were saying some of the same things about China 25-30 years ago, but companies started manufacturing even with those risks in mind.
If you are looking to learn more about how to import to from Vietnam to the U.S., have specific questions about logistics or supply chain management for imports from Vietnam or specific tariff, classification or customs related matters with relation to imports from Vietnam to the U.S., please contact us today or request a quote to learn more about how we can offer you customs tailored solutions to meet your logistics and supply chain needs.