A series of challenges that VN seafood industry may face in 2025

?Despite recording a strong recovery in 2024, the seafood industry is still facing and continues to face challenges related to raw material shortages, increased competitive pressure and the risk of rising shipping costs again.

?2024 is witnessing strong growth in Vietnam's seafood export industry with export turnover approaching the 10 billion USD mark. After reaching a peak of 1 billion USD in October, seafood exports in November reached 924 million USD, up 17% over the same period in 2023. Accumulated to the end of November, Vietnam's total seafood export turnover reached nearly 9.2 billion USD, up 11.5% over the previous year.?

Shrimp continues to be the leading product, with an impressive growth of 22% in November and is expected to reach 4 billion USD by the end of the year. Other products such as pangasius and tuna also recorded positive growth. VASEP forecasts that pangasius exports (the second largest export item) could reach 2 billion USD this year. For tuna, it is also forecast to reach a record 1 billion USD.?

“By the end of the year, with the current growth momentum, the Vietnamese seafood industry can complete the target of 10 billion USD in exports, an increase of 11.5% compared to 2023.”, VASEP commented.

According to VASEP, President Donald Trump was re-elected for a second term and will officially take office early next year, and it is predicted that there will be new tax policies on imported goods to the US, including pangasius.

With the motto "America First" or "Make America Great Again" and focusing on economic development, the Trump administration's policies will have an impact on Vietnam, including the pangasius export industry. However, the situation is expected to improve, orders will increase because Vietnam and the US are comprehensive strategic partners, not to mention having separate tax policies.

Previously, according to the preliminary conclusion of POR 20, the two defendant enterprises were required to receive an anti-dumping tax rate of 0 USD/kg. The remaining 6 enterprises are all eligible to receive separate tax rates of 0 USD/kg.

The preliminary results are quite positive for Vietnamese pangasius exporters as all eight companies in the review received a tax rate of 0 USD/kg. The above tax rate has decreased compared to the official tax rate of the previous POR19 review, which was from 0 to 0.18 USD/kg.

For shrimp, US imports from the top 3 main suppliers have all decreased, which has increased concerns about supply shortages. Market sentiment is more optimistic, inventories have decreased and supply and demand have rebalanced, leading to an expected increase in shrimp import demand, along with improved shrimp prices.

The Trump administration's plan to increase import taxes is encouraging US businesses to increase imports to stock up before the new tax takes effect. This brings opportunities for Vietnamese shrimp businesses in the last months of the year.

However, in addition to opportunities, the aquaculture industry faces challenges in the last months of this year and early next year.

Raw shrimp shortage

The shrimp industry is currently facing a shortage of raw materials and high prices. Since mid-August, the price of commercial shrimp in the Mekong Delta has increased quite strongly.

Notably, the price of 50 shrimp/kg at the pond increased the most in October, up 6%. Both factories and traders have shifted their focus to small shrimp due to the scarcity and high price of large shrimp.

Prices have increased significantly, especially for the 50-count/kg variety, up about 30% since week 35, to VND155,000 ($6.1)/kg in mid-November. This is the first time the price of the 50-count variety has reached $6/kg since the end of 2021.?

According to VASEP, the reason is partly due to reduced supply, fewer farmers in the crop, and shrimp diseases.

Farmed shrimp output has decreased due to harsh weather and high input costs for shrimp farming. Raw shrimp production from major producing countries in the world has encountered many problems, causing output to decrease, also contributing to higher demand for Vietnamese shrimp.

Raw shrimp prices increased sharply in October and continued to increase in November. The supply of raw shrimp this year has decreased significantly, the season is shorter than last year.

Inventories at factories have also decreased due to the combination of high export demand and low raw material supply. To maintain purchasing activities and meet export orders, large processing factories have had to increase purchasing prices.

Raw black tiger shrimp purchasing activities of processing factories have decreased significantly in October due to limited supply.

In an article shared on VASEP, Mr. Ho Quoc Luc, Chairman of the Board of Directors of Sao Ta Food Joint Stock Company, added that the quality of the shrimp is no longer at the highest level and the shrimp farming environment is deteriorating, especially the water source. Within a month after stocking, shrimp ponds were infected with a fairly common disease, EHP disease and the next step is White feces.

“In this situation, raw shrimp will be in short supply until the first quarter of next year. During this period, processing enterprises face great challenges, because they have to buy raw shrimp at high prices, but the price of finished shrimp consumed must compete fiercely with lower price shrimp from many countries, leading to a decrease in production and business efficiency," said Mr. Luc.

Competitive pressure on pangasius is increasing

As for pangasius, the competitiveness of other white fish products such as tilapia, snakehead fish, pollock, etc. is increasing.

Data from the International Trade Center (ITC) shows that for more than a decade, since 2012, frozen cod fillets with HS code 030471 have always been the most consumed product in the world, accounting for about 13% of the white fish market share. Cod is favored by consumers, has high brand value, good meat quality, and abundant nutritional value, so this species has a high-class position in the cuisine of many countries. Following in turn are frozen cod products with HS code 030363, frozen Alaska pollock fillets and frozen pangasius fillets with HS code 030462. Pollock is a good alternative to cod with a sweet taste, less fat, more affordable and stable price than other fish species and is often used to process basic products such as fish balls and fish fillets.

In addition, tilapia is also one of the "heavyweight competitors" of pangasius. Although Vietnam raises and exports tilapia products, but China is the largest supplier of this white fish to the world, and is also the biggest competitor in the same region competing with pangasius.

The US is one of the two most important markets for Vietnamese pangasius exports, however, tilapia (mainly from China) often has a greater position and influence than pangasius in this market. Tilapia is rich in protein and essential amino acids, the price of tilapia is often quite "affordable" in the market. In particular, frozen tilapia fillets are a popular product in the US.

In addition, many countries are also starting to raise pangasius. Pangasius products were once considered a monopoly of Vietnam, but no longer position of “Pangasius dominator", many countries have also started raising pangasius for domestic use and reducing imports from the world such as India, Indonesia, Bangladesh, China. These countries all have advantages in raw materials and production costs, creating high pressure on the Vietnamese pangasius industry.

Vietnamese pangasius accounts for 42% of global pangasius production, while India, China, and Bangladesh account for 15-21%. Indian pangasius is increasing but the size of the fish is very small, mainly supplied domestically. Indonesia alone, the output is not high but has been exported to the Middle East market with its own brand and is creating prestige.

China is the largest destination for Vietnamese pangasius. However, since 2023, Hainan Xiangtai Fishery, one of China's largest tilapia exporters, has announced that it is actively participating in the pangasius supply chain to meet the increasing domestic market demand.

This enterprise has built hatcheries, research centers, processing lines, increased cooperation, promoted communication, developed services and diversified its product portfolio according to different consumption channels. These are the tasks that this company has been doing and will do to gain market share in the pangasius supply chain.

China has been farming pangasius for more than 7 years, maintaining an annual output of about 1.4 million tons, mainly serving the domestic market. However, this also means that the country will reduce imports.

Lack of raw materials for tuna

For tuna products, processing and exporting enterprises face many difficulties due to the lack of raw materials of pure origin. The reason is that many fishing vessels in the three key provinces for tuna fishing are stuck on shore due to regulations on the size of skipjack tuna allowed to be caught (the minimum length allowed to be caught is 500mm).

According to this regulation, if an export processing enterprise buys skipjack tuna smaller than the size allowed to be caught, it will not be granted a certificate of raw seafood for export. Therefore, enterprises are no longer purchasing small skipjack tuna as before, so the consumption of skipjack tuna is slow, causing the price of fish to decrease.

In many localities, the price of skipjack tuna has dropped to 19,000 - 20,000 VND/kg. At this price, although many fishing vessels achieve a good output per trip, due to costs of up to 200-300 million VND, the decrease in fish prices has caused the profits earned by the vessel owners to almost disappear.

Meanwhile, the cost of each trip and labor costs have increased, causing many difficulties for the vessel owners. Due to unprofitable fishing, many fishermen have left their trawlers on shore during the last trip. The inability to go offshore is causing fishermen to lose income and significantly affect their family lives.

Freight rates may increase again

Another challenge that may weigh on export businesses in general and seafood businesses in particular is that freight rates may increase after Mr. Trump officially takes over the White House. Donald Trump's victory is expected to have a strong impact on seaport freight rates globally when Mr. Trump previously proposed to apply tariffs of 10% to 20% on most imported goods from other countries and a minimum tax of 60% on all imported goods from China.

Talking to us, Mr. Nguyen Hoang Giang, Head of Analysis of the Transport - Logistics - Aviation Industry Group, SSI Investment Analysis & Consulting Center (SSI Research), said that when the tax rate is announced, US importers can quickly import as many goods as possible, before the decree takes effect. The high and urgent import demand will lead to a sharp increase in sea freight rates in 2025.

This expert said that in fact, this also already happened in 2018 when Mr. Trump announced a series of tax policies applied to imported goods, especially from China. Data from Freightos, a sea freight booking platform, shows that after Mr. Trump announced a series of tariff policies in July 2018, container freight rates nearly doubled compared to the beginning of the year within just 4 months, then peaked in mid-November. Therefore, fhe reason is that many importers “race” to import goods before the tax takes effect in January 2019. (“Doanh Nghiep & Kinh Doanh” news, 6th Dec., H.Mi)

TKL trslted ([email protected])