Vietnam and the US share a rich trade history, one that’s only grown stronger with the rise of the China + 1 strategy. With more companies moving their manufacturing operations to Vietnam, there’s been a significant uptick in trade between these two countries. But with this increased activity comes the need for efficient logistics management, especially when it comes to shipping from Vietnam to the US. Let’s dive into the essentials of navigating this vital trade route effectively.
Vietnam and US Trade Volume and Trends
Thanks to the Bilateral Trade Agreement signed in 2001, trade ties between Vietnam and the US have blossomed. Tariffs have seen a drastic reduction from a hefty 40% to just 3%, fueling remarkable growth in commerce. Even though there was a minor drop in 2023, Vietnam’s exports to the US still achieved a substantial USD 97 billion. Notably, key exports include computers, telecommunication equipment, machinery, and textiles, showcasing the diversity and strength of Vietnam’s trade.
Logistical Infrastructure and Geography
Transporting goods within Vietnam can be quite a journey, almost like crossing borders between two countries due to the country’s long coastline and lack of good infrastructure. Because of this, moving cargo from north to south, or the other way around, takes about 2 days by truck. In the north of Vietnam, electronics manufacturing thrives with big players like Taiwan’s EMS sector setting up manufacturing plants in the region. On the flip side, in the south, the focus is on making traditional items like clothes, shoes, furniture, and home appliances.
Because of what each region specializes in, there’s more cargos being shipped out of Ho Chi Minh City via ocean freight to the US. This difference in what each area makes not only affects how things are moved around but also highlights the need for smart planning and efficient transport in Vietnam’s fast-changing economy, especially when shipping from Vietnam to the US.
The China + 1 Strategy in Vietnam
Vietnam is stepping into the spotlight as a major player in global manufacturing due to the China + 1 strategy. This shift is not just about diversifying production, it’s also about smart risk management – a strategy that really paid off after China tightened its COVID-19 measures. Add in the ongoing trade tensions between the US and China, along with the appealing labor costs in Vietnam, and you got a recipe for success. In addition, Vietnam’s prime location right below South China makes the transition even smoother, especially compared to other countries in Southeast Asia. Learn more about the China + 1 strategy with our Logistics of China Plus One eBook.
Leverage on Vietnam’s Business Landscape
Vietnam’s extensive coastline and strategic location have made it a key player in global trade. With numerous seaports and connections to neighboring countries like Laos, Cambodia, Thailand, and Southern China, Vietnam serves as a vital gateway for outbound ocean shipments. This has spurred the development of a cross-border trucking infrastructure, supported by export and import agreements that streamline customs procedures.
Thanks to this collaboration, global manufacturers can leverage on Vietnam’s resources by importing semi-finished goods from neighboring countries such as China and utilizing assembly plants in Vietnam to complete their products. By following government standards to change country of origin to Vietnam, manufacturers can benefit from a lower tax rate when shipping from Vietnam to the US, as compared to shipping from China. Vietnam also offers numerous direct ocean freight services to the US West Coast, including express options with Dimerco Vietnam with a transit time of just 21 days.
Key Considerations before Shipping
Navigating Vietnam to US shipments requires careful consideration:
- Location: Vietnam’s extensive coastline stretches over 3,200 km, making port proximity a crucial consideration for your shipping needs. The key seaports and airports are strategically located across the country.
- Commodity: Consider the nature of your cargo – it heavily influences your choice between air and ocean freight. High-value items typically require air freight services, while lower-value goods are better suited for ocean freight. In Vietnam, air freight commonly handles dangerous goods (DG), robotic components, integrated circuits (ICs), and urgently needed textile exports. For ocean freight, textiles, garments and furniture are the common commodities being shipped out.
- Time: The time sensitivity of your cargo is another crucial factor in selecting the appropriate mode of transportation. Air freight guarantees swift delivery, with transit times of 6-8 days from Vietnam to the US East Coast and 5-7 days to the West Coast. In contrast, ocean freight provides a more cost-effective alternative, with longer transit times of around 50 days to the US East Coast and 25-33 days to the West Coast. As mentioned, Vietnam offers numerous direct ocean freight services to the US West Coast, including express options with Dimerco Vietnam with a transit time of just 21 days.
- Cost: Understanding the cost disparity between air and ocean freight is essential. The price of your freight depends on both the nature of your cargo and the urgency of delivery. Air freight tends to be more expensive, making it suitable for urgent or high-value cargo. Conversely, ocean freight offers a more economical option for lower-value goods, unless expedited delivery is required.
Possible Shipping Challenges to the US
Vietnam, like many developing nations, faces logistical hurdles when shipping goods to the US, especially during peaks seasons. For air freight, direct flights from Vietnam to the US are rare, which means it relies on connecting hubs such as Singapore, Hong Kong, Taiwan, and Korea. Because of this, you will experience a competition for the limited space in the connecting hubs, compounded by Vietnam’s robust exports to the US. This leads to space issues for both your initial leg from Vietnam to connecting hubs and the second leg from the hubs to the US.
Moreover, high freight costs can pose another significant challenge for you, particularly during peak seasons. As demand surges, so do shipping expenses, especially for your urgent shipments. When everyone is bidding for air freight space from Asia to the US, the freight costs naturally escalate.
Navigating Shipping Challenges to the US
Navigating these challenges calls for some out-of-the-box thinking and flexibility in route planning. Let’s take air freight, for example. It’s crucial to partner with a freight forwarding company in Vietnam that can secure space not just in hub cities but also in other locations with direct flights to the US.
Vietnam to the US via Guangzhou
Dimerco is a great example – Dimerco has an agreement in place with airlines flying from Guangzhou straight to the US. This means you can secure your space hassle-free without battling it out for slots at busy hub stations. And if cost is a concern and your shipment is not urgent, there’s another smart option: cross-border road freight from Vietnam to Guangzhou. It is a cost-effective way to move your cargo by land which takes about 1 to 1.5 days from Hanoi, and once your cargo reaches Guangzhou, you can easily switch to air freight for the final leg to the US, completing your Vietnam to the US shipment.
NOTE: Guangzhou is just one of the many transport hubs across Asia served by Dimerco, a global logistics company that focuses on cargo moving to, from and within the Asia-Pac region.
Vietnam to the US via Bangkok
Not all of your Vietnam to USA shipping strategies can be planned in advance. In those cases, it helps to have a freight forwarding partner that knows the local market well and can develop alternate strategies when urgent needs arise. That’s especially true for the volatile fashion supply chain.
Here’s an example. During the Covid pandemic, demand for space on air freighters from Vietnam to the US far exceeded supply. A high-end women’s fashion company worked with Dimerco to shift the origin airport from Ho Chi Minh City to Bangkok, Thailand to secure reliable space. This Road + Air transport service involved trucking freight from Vietnam factories across the border to Thailand, taking only 2-3 days to reach Bangkok airport, to avoid the congestion in Vietnam and get goods to market to save the holiday selling season.
Shipping from Vietnam to the USA
As Vietnam’s prominence in global trade grows, understanding the nuances of shipping from Vietnam to the US becomes increasingly important. By considering the important factors, you can streamline your shipping process, keep costs in check, and ensure your goods reach the US smoothly. Do you need a logistics and freight forwarding company in Vietnam? Contact Dimerco today to start a discussion.