Seafood exports declined in the first half of 2023 – Is there a chance to recover in the second half of the year?

I. Overview of Vietnam seafood exports in the first half of 2023

According to a report by the Vietnam Association of Seafood Exporters and Producers – VASEP, after assessing businesses in the industry, the decline in seafood exports in the first half of 2023 is even more serious than the period in the previous the peak of the Covid-19 epidemic, the period when businesses had to produce according to the “3 on-site” option.

Accordingly, seafood exports orders in the months have decreased by 20-50% over the same period. Thereby pushing up inventories and pushing businesses to bear the risks of pressure on bank interest rates or increased production maintenance costs, etc.

According to a general report, in June 2023, Vietnam’s seafood exports were estimated at nearly $800 million, down 21%.

Besides, the total export turnover of the seafood industry in the first 6 months of 2023 was only 4.13 billion USD, down 27.4% compared to the first half of last year. In which, the production of key products such as shrimp and pangasius decreased deeply.

1. Seafood exports situation of each specific product

a. Shrimp exports in June have positive changes

As of the end of June 2023, Vietnam’s shrimp export output reached nearly $1.6 billion, down 31% over the same period in 2022. Industry experts forecast that the whole year 2023 turnover will decrease by $1 billion compared to the previous year’s results ($4.3 billion).

However, the situation of shrimp exports is also gradually showing signs of recovery in this June. From a decrease of 34% over the same period last year in 5 months, in June the decrease narrowed to only 29%.

Comparing Vietnam’s shrimp importing countries, in May, China ranked first in Vietnam’s shrimp consumption market, accounting for 23%. Right behind is the US in second place, accounting for 21%.

Looking at seafood exports of shrimps sales each month, the US market is showing signs of getting better. In terms of this market alone, according to the latest data as of June 15, 2023, shrimp imports from Vietnam reached US$257 million, down 41% over the same period in 2022. In May 2023 alone, exports shrimp to the US reached 68 million USD, the highest level since the beginning of this year. Although it still grew negative 31% over the same period in 2022, this was the smallest decrease compared to the previous months, possibly a sign of a recovery for the last months of the year.

b. Exports of squid and octopus recorded a slight decrease than other seafood exports

According to a consolidated report, Vietnam’s seafood exports of squid & octopus in the first five months of the year reached more than $240 million, down 13% over the same period last year. In May alone, exports reached US$52 million, down 18% over the same period.

Although squid & octopus exports inevitably grew negative in the general decline of Vietnam’s seafood exports, compared to other major aquatic products, the export value of squid & octopus still recorded a slight decrease.

Specifically, in the structure of exported squid & octopus products, squid accounted for 57%, while octopus accounted for 43%. In the first 5 months of 2023, the export value of squid decreased by about 11% and octopus decreased by 15% compared to the same period in 2022.

As of May this year, Vietnam’s squid and octopus have been exported to 65 seafood exports markets. Top 10 largest import markets of Vietnam’s squid and octopus include Korea, Japan, Hong Kong, Italy, Thailand, Malaysia, Taiwan, China, the US, Spain and France.

Korea is currently the largest import market for Vietnam’s squid and octopus, accounting for 35%. Figures for the first 5 months of 2023, squid & octopus exports to South Korea reached $84 million, down 13%. Japan is the second largest import market, accounting for 27%. Compared to the Korean market, Vietnam’s squid and octopus exports in seafood exports to Japan have more positive signals. Export of squid and octopus in the first 5 months of 2023 to Japan reached 64 million USD, up 4% over the same period in 2022.

c. Pangasius exports are not out of the general decline of seafood exports

According to VASEP, after 2022 recording strong growth, the situation of Vietnam’s pangasius exports to markets participating in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in the first 5 months of 2023 decreased by 36 % over the same period last year, reaching about 94 million USD. In May 2023 alone, the seafood exports volume of Vietnamese pangasius to the markets of CPTPP member countries only reached 19 million USD, down 41% over the same period.

By the end of May, many CPTPP markets recorded negative growth such as Canada, which decreased by 50%; Mexico down 50%; Japan fell 14%. The only bright spot of this seafood exports market block in importing Vietnamese pangasius is Singapore when this country in the first 5 months of the year still maintained a positive growth of 16%, reaching 15 million USD.

Besides, Canada is the second largest importer of Vietnamese pangasius. This is a market to import seafood with good prices and stable growth throughout North America. This country and the US share a long common border, so there is a close trade relationship. Therefore, the US is the market with the most influence on Canada’s seafood exports. However, the difficulties the US has to face in the context of global inflation since the end of 2022 is one of the reasons why the situation of seafood exports in general and Vietnamese pangasius in particular to Canada cannot be reached breakthrough.

2. Businesses in the industry are struggling because seafood exports are plunging

Along with the burden of production costs, especially the cost of feed, seed, etc., besides the plunging seafood exports situation, the business results in the first half of 2023 of many enterprises in the aquatic industry have increased products are severely affected.

As the largest seafood exports enterprise in the country, Minh Phu Seafood Joint Stock Company in 2022 has achieved a record of revenue with VND 16,000 billion, profit after tax reaching more than VND 800 billion. This is the highest level ever, however, by the first quarter of 2023, the company has recorded a loss of nearly 100 billion dong, after 7 years of full profit.

Another company in the industry – Vinh Hoan Joint Stock Company, although still achieving a profit of more than 118 billion dong in the first quarter of this year, its profit has decreased by more than 60% compared to the same period in 2022. Ms. Truong Thi Le Khanh, Chairwoman The Board of Directors of Vinh Hoan Joint Stock Company, said that the reason for the decrease in profit of seafood exports was due to a sharp decrease in sales volume and selling price compared to last year. Similar to Nam Viet Joint Stock Company, which recorded a revenue of 1,157 billion VND in the first quarter, although only down 5%, profit decreased by 55% over the same period, reaching 92 billion VND. The reason is also explained by high financial costs and food prices.

However, amid the general difficult situation, there are still seafood exports enterprises that find their own way to maintain growth. According to the financial report of the first quarter of 2023 of Sao Ta Food Joint Stock Company, the revenue reached VND 1,008 billion, down 24%, but the net profit of seafood exports reached nearly VND 43.7 billion, up 7% over the same period last year. The above results are shown because the enterprise has reduced 23% of COGS and 66% of selling expenses in the context of increasing interest and administrative expenses.

Find out more information about seafood businesses here.

3. The reason for the alarming decline in seafood exports in the first 6 months of 2023
According to industry experts, there are many different reasons for the alarming decline in seafood exports in the first half of this year.

First, the current epidemic, the Russia-Ukraine war as well as the world’s inflation and recession in the past two years have led to the global economy going down, pushing up inflation. Global people are starting to pay attention to the policy of austerity, cutting spending, and choosing cheap foods… This is the main reason why shrimp and seafood exports demand has decreased and supply in the world increased, especially from Ecuador and India.

Especially, for Vietnamese shrimp products, which inherently have added value, is a competitive advantage over competitors from India and Ecuador. But this is also a disadvantage when consumers in import markets are tightening spending, limiting restaurants, which is the main consumer segment for ready-to-eat products. value added products.

Besides, the seafood industry is also facing big problems when facing the situation of logistics development in Vietnam. Along with that is the difficulty in the lack of cold storage, especially during peak times. It can be seen that for the process of producing and supplying seafood, frozen storage plays an indispensable role, ensuring the quality of aquatic products.

Currently, most domestic seafood enterprises are investing in frozen storage to complete the process. However, the current capacity is still not enough for the same enterprise to maintain production for a long time. Moreover, commercial and service warehouses for import and export frozen seafood are mainly located in the South, while the North and Central regions are still few and limited.

Besides, in terms of transportation, in fact, the inland fishery industry mainly uses road vehicles, there are not many routes for railways and waterways because of high costs and many arising. However, the development and maintenance of roads requires large investments in infrastructure and maintenance, from the construction of roads and highways to the maintenance of the transport system. This cost is often passed on to consumers through freight rates, causing increased costs for logistics activities, thereby making it difficult to optimize product prices when delivered to customers.

II. RECOVERY FORECAST FOR THE SEAFOOD EXPORT FOR THE LAST HALF OF THE YEAR

According to reports analyzing the seafood industry, many experts are expecting that seafood exports in the second half of 2023 will recover when the consumption demand of three main markets, the US, EU and China shows signs of increasing. Specifically, in the US market, the import situation will recover from the second half of 2023 due to cooling inflation, reduced inventory levels and high demand for the holidays at the end of the year. This helps Vietnam’s seafood export turnover to the US in the second half of the year likely to grow by 40 to 50% over the same period.

In the EU market, it is expected that pangasius consumption will continue to improve and stabilize in the second half of the year. Although inflation in the EU is still high, many other white fish supplies have been affected by the Russia-Ukraine conflict. So Vietnamese pangasius is still open to this market.

With the shrimp import market in particular, the recovery of the industry depends a lot on the recovery of the market, and the recovery time depends on the economic situation of the countries. But compared to other products, shrimp products face more difficulties. Because in recent years countries like Ecuador and India have emerged with large shrimp farming output. and thanks to that, their shrimp prices are much better than shrimps of Vietnam. Meanwhile, the demand of the market makes the above countries increasingly lower the selling price. Therefore, Vietnamese shrimp enterprises face more difficulties in competition. Especially when shrimp farmers can’t stand the low selling price, while the production price increases.

Particularly for the Chinese market, experts predict that seafood exports to this market of 1.4 billion people will not grow strongly compared to the first half of this year.

In conclusion, because there are still many unpredictable objective factors, the forecast of seafood export in 2023 is only at 9-10 billion USD.

The above information is updated from the “Report on Vietnam’s seafood export in the second quarter of 2023“. The report provides full information on the macroeconomic, trade supply and demand of seafood export, relevant information and forecasts from the latest updated data.

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