Bien Dong Shipping Company General Director Bui Quoc Anh said shipping charges were at a peak and the volume of exported goods was high in July, before the US financial crisis struck, sending shockwaves around the world.

Now, with Japan, the UK, the US and Germany in recession, the huge price cuts offered on shipping fees indicate Vietnam’s economy will also be swamped by the tidal wave of gloomy economic news.

Vietnam’s government has already cut its 2008 economic growth target twice this year to 6.7 percent from the 9 percent target it had at the start of this year.

The government has also been struggling to bring the nation’s widening trade deficit under control.

From January to October, the trade deficit ballooned to US$16.3 billion as demand for imports by Vietnamese consumers outstripped the value of exports. The full year trade deficit is estimated to reach $19 billion as the nation continues to import more than it exports.

Bien Dong Shipping Company’s Anh said the shipping sector had already noticed a downturn in exports, with lower demand for shipping services forcing companies to lower fees.

Shipping a 20-foot container from Vietnam to Europe now costs $300, down from $1,300 in the second quarter, while the cost of shipping a container to Brazil via China is less than $10 a ton now compared to $80- 100 per ton in the middle of the year, he said.

Anh, whose company has a 15 percent share of Vietnam’s domestic and international sea cargo sector, said domestic charges had also fallen. International transport companies dominate Vietnam’s sea cargo market, with an 80 percent marketshare.

Shipping a 20-foot container from the north of Vietnam to the south now costs VND4.8 million ($280), down from VND5.8 million to VND6 million ($341-353) but it only costs VND3.8 million ($220) to send a container in the opposite direction.

Tran Huy Hien, general secretary of the Vietnam Freight Forwarders Association, said the impact of the global economic downturn on Vietnam had taken international shipping lines by surprise.

Hien said shipping companies had forecast high growth for Vietnam’s economy and exports over the course of this year so they scheduled many ships to Vietnamese seaports during the early months of this year.

“They did not expect everything to change while their ships were berthed,” said Hien, adding the companies were finding it difficult to fully load their ships so they could leave Vietnamese ports.

Hien said long distance international cargo charges had fallen by more than 70 percent year-on-year while the charges for importing and exporting to Asian destinations had dropped by 5 to 10 percent.

Costs were further reduced for exporters, Hien said, because since July international shipping lines had also removed surcharges on Vietnamese exports and fuel surcharges.

Anh from Bien Dong Shipping Company, an affiliate of Vinashin, said the volume of cargo exported through Vietnamese ports was down an estimated 20-30 percent from a few months ago.

Pham Minh Huong, director of Phong Phu Textile Company’s Import Export Department, said reduced shipments were also affecting importers.

Le Quoc An, chairman of Vietnam Association of Textile and Apparel, said the trend was worrying as exports were a key contributor to Vietnam’s economy.

An said local producers had lost orders as a result of a slump in demand from importers in key markets, including the US, Europe and Japan, which combined represent more than half of the country’s export earnings.

An said the country was unlikely to meet its goal of exporting $9.5 billion this year.

Some agricultural exporters said they were not keen on sending shipments overseas right now because they were worried some customers will be slow to pay for the goods.

Vietnam’s monthly export revenue has fallen more than 18 percent from a high of $6.25 billion in July to $5.1 billion in October, according to Vietnam’s General Statistic Office.

The trend will continue if leading world economies, such as the US, remain in recession, said Anh.