Challenges ahead for Vietnam’s seafood industry in 2025

Strong growth in 2024
Vietnam’s seafood export industry is experiencing significant growth in 2024, with export turnover approaching the USD 10 billion. After hitting a peak of USD 1 billion in October, seafood exports for November reached USD 924 million, marking a 17% year-on-year increase. By the end of November, the total export turnover for the year had reached nearly USD 9.2 billion, reflecting an 11.5% increase compared to 2023.

Shrimp continues to be the leading product, with an impressive growth rate of 22% in November and is expected to reach USD 4 billion by the end of the year. Other products, such as pangasius and tuna, have also seen positive growth. VASEP forecasts that pangasius exports—Vietnam’s second-largest seafood export—could reach USD 2 billion this year. Tuna is also expected to break a record, reaching USD 1 billion in exports.

“At the end of the year, with the current growth rate, Vietnam’s seafood industry is likely to achieve its goal of USD 10 billion in exports, an 11.5% increase compared to 2023,” VASEP commented.

Impact of U.S. trade policies
The re-election of Donald Trump as U.S. President, with his official inauguration set for early 2025, is expected to result in new tariff policies on imports, including pangasius. With his “America First” policies and a focus on economic development, Trump’s administration is likely to introduce changes that could impact Vietnam’s seafood exports. However, the situation is expected to improve, with an increase in orders anticipated due to the strategic partnership between Vietnam and the U.S. Additionally, there are specific tax policies that could benefit Vietnam’s seafood exports.

Previously, according to the preliminary findings of POR 20, two defendant companies were required to accept an anti-dumping tax rate of 0 USD/kg, while six other companies were granted individual tax rates of 0 USD/kg. This result is considered positive for Vietnamese pangasius exporters, as all eight companies involved in the review received a 0 USD/kg tax rate, a decrease from the official tax rates in the POR19 review, which ranged from 0 to 0.18 USD/kg.

Shrimp raw material shortages
The shrimp industry is currently facing raw material shortages and rising prices. Since mid-August, the price of farmed shrimp in the Mekong Delta has increased significantly. Notably, the price of shrimp at 50 pieces per kilogram at farms saw the biggest increase in October, rising by 6%. Both processing plants and traders have shifted their focus to smaller shrimp sizes due to the scarcity and high prices of larger shrimp.

Prices have increased significantly, especially for the 50 pieces/kg size, which rose by approximately 30% from week 35, reaching VND 155,000 (about 6.1 USD)/kg in mid-November. This marks the first time the price of this shrimp size has reached 6USD/kg since late 2021.

According to VASEP, part of the reason for the price surge is the reduced supply due to fewer shrimp being farmed and disease outbreaks affecting shrimp populations. Shrimp farming yields have decreased due to extreme weather conditions and rising input costs. The reduction in global shrimp production has contributed to an increase in demand for Vietnamese shrimp.

The price of raw shrimp material surged dramatically in October and continued to rise in November. The supply of raw shrimp material this year has dropped significantly, and the season is shorter than last year. Inventory levels at processing plants 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 plants have had to raise their buying prices.

The raw material procurement activity for tiger shrimp at processing plants dropped significantly in October due to limited supply.

In a statement shared on VASEP, Ho Quoc Luc, Chairman of the Board of Directors of Sao Ta Food Joint Stock Company, noted that the quality of shrimp broodstock is no longer at its highest level, and the shrimp farming environment, particularly the water quality, has worsened. Within a month of stocking, shrimp ponds are already experiencing widespread disease, including EHP and the next stage of white feces disease.

“In this situation, the shortage of raw shrimp material will continue until the end of the first quarter of next year. During this period, processing enterprises face significant challenges as they must buy raw shrimp at high prices, while the price of finished shrimp must compete fiercely with cheaper shrimp from other countries, leading to a reduction in production and business efficiency,” Luc observed.

Increasing competition for pangasius
As for pangasius, competition from other whitefish products such as tilapia, snakehead, and Alaska pollock is growing increasingly intense. Data from the International Trade Centre (ITC) shows that frozen cod fillets (HS code 030471) have been the most consumed product in the world for over a decade, accounting for about 13% of the market share for white-fleshed fish. Cod is favored by consumers due to its high brand value, good quality, and rich nutritional content, making it a premium option in many countries’ cuisines.

Following cod, frozen Alaska pollock fillets and frozen tilapia fillets are increasingly popular alternatives. Tilapia, in particular, is an affordable option with a mild flavor, low fat content, and stable prices compared to other fish species, and is commonly used to make basic products like fish balls and fillets.

Moreover, tilapia has become one of the “heavyweights” competing with pangasius. Although Vietnam produces and exports tilapia products, China is the largest supplier of tilapia to the world and represents a significant competitor in the same region. The U.S. is one of the two most important markets for Vietnam’s pangasius exports, but tilapia (mainly from China) holds a larger market share and influence than pangasius in the U.S. market. Tilapia is high in protein and essential amino acids, and its price is generally quite affordable. In particular, frozen tilapia fillets are a popular product in the U.S.

Furthermore, many countries are now starting to farm pangasius. What was once considered Vietnam’s exclusive industry is no longer the case, as countries like India, Indonesia, Bangladesh, and China have entered the pangasius farming sector to serve domestic markets and reduce imports. These countries have advantages in raw material availability and production costs, which creates significant pressure on Vietnam’s pangasius industry.

Vietnam accounts for 42% of global pangasius production, while India, China, and Bangladesh together account for 15-21%. India’s pangasius production is increasing, but the fish is very small, mostly for the domestic market. Indonesia’s output is low, but the country has begun exporting pangasius to the Middle East under its own brand and is building its reputation.

China is Vietnam’s largest market for pangasius, but since 2023, Hainan Xiangtai Fishery, one of China’s largest tilapia exporters, has announced its active involvement in the pangasius supply chain to meet rising domestic demand.

This company has built hatcheries, research centers, and processing lines, increased cooperation, enhanced marketing, developed new services, and diversified product portfolios across different consumer channels in order to gain market share in the pangasius supply chain.

China has been farming pangasius for over seven years, maintaining an annual output of around 1.4 million tons, mostly for domestic consumption. However, this also means China will reduce its imports.

Tuna raw material shortages
As for tuna, processing and exporting companies are facing difficulties due to a shortage of genuine raw materials. This is mainly because many fishing vessels in the three key tuna fishing provinces are unable to operate due to regulations on the minimum allowable size for caught tuna (500mm).

Under this regulation, if processing companies purchase smaller tuna than the minimum size, they cannot receive certification for the raw materials to be used for export. As a result, businesses are no longer purchasing smaller tuna, leading to slower sales and lower prices for tuna.

In many areas, the price of tuna has fallen to VND 19,000-20,000 per kilogram. With this price, many fishing vessels are struggling to make a profit, as their operational costs reach VND 200-300 million per trip, leaving them with almost no profit due to the lower tuna prices.

At the same time, costs for each fishing trip, including labor expenses, have risen, causing great difficulty for vessel owners. Due to the unprofitable fishing conditions, many fishermen have docked their vessels. The inability to go out to sea has resulted in a loss of income for the fishermen, significantly affecting their families’ livelihoods.

Shipping costs may rise again
Another challenge that could weigh heavily on exporters in general, and the seafood industry in particular, is the potential increase in shipping costs once Donald Trump officially takes office.

Trump’s victory is predicted to strongly impact global shipping costs, as he has previously proposed tariffs ranging from 10% to 20% on most imports, with a minimum tariff of 60% on all imports from China.

In an interview, Nguyen Hoang Giang, Head of the Transport – Logistics – Aviation Sector Analysis Group at SSI Research, stated that once the tariffs are announced, U.S. importers may rush to import as much as possible before the new policies take effect. This surge in import demand will likely lead to a sharp increase in shipping costs in 2025.

This phenomenon has occurred before, in 2018, when Trump introduced a series of tariffs on imports, especially from China.

Data from Freightos, a shipping platform, shows that after Trump announced his tariff policies in July 2018, container freight rates nearly doubled within just four months, peaking in mid-November. The surge was due to importers rushing to secure goods before the tariffs went into effect in January 2019.

Tilapia exporter, poses a significant challenge in the U.S. market, where tilapia is often preferred for its affordability and protein content.

Additionally, countries such as India, Indonesia, and Bangladesh have ramped up pangasius production, reducing reliance on imports and exerting pressure on Vietnam’s global market share.

VFM