7 common risks in import and export 

(Case study of the Israel-Iran war)

Import and export are becoming a driving force for the growth of many Vietnamese businesses. However, behind contracts worth tens or hundreds of thousands of USD lie a series of risks in import and export that many businesses have not anticipated.

In reality, even a small mistake in documentation, international payments, or logistics can cause a business to lose all the profit from a shipment.

Particularly in the context of constantly fluctuating global supply chains – from logistics crises and geopolitical conflicts to the Israel-Iran war – international shipping routes can be disrupted, leading to sharply increased shipping costs and extended delivery times.

According to several international trade organizations, approximately 30% of international trade disputes arise from errors in documentation and contract terms , while the majority of the remaining risks stem from logistics, transportation, and market fluctuations .

Therefore, a thorough understanding of common risks in import and export will help businesses and logistics students gain a clearer understanding of the industry’s realities.

International payment risk – the risk of losing money after delivery.

International payments have always been one of the biggest risks in international trade.

Many exporting businesses have encountered this situation:

• The customer received the goods but was late in making payment.

• Contract term disputes

• Letters of credit (L/C) with unfavorable terms.

In many cases, businesses only discover the problem when the goods have already arrived at a foreign port.

Why do payment risks often occur?

Some businesses, when expanding into export markets, often fail to thoroughly check the credibility of their partners or accept high-risk payment methods such as deferred T/T .

Furthermore, a lack of understanding of the terms in the Letter of Credit can also lead to the bank refusing payment.

Solutions for businesses

To reduce international payment risks, businesses should:

• Verify the creditworthiness of your business partner through a bank or credit institution.

• Use an irrevocable letter of credit.

• Work with a reputable intermediary bank.

Import and export documentation risks – a single incorrect detail can result in losses of thousands of USD.

In import and export activities, documentation plays an extremely important role.

However, this is also where mistakes are most likely to occur.

Some common mistakes include:

• Incorrect HS Code when declaring to customs.

• Incorrect information on the Commercial Invoice

• Missing Certificate of Origin (C/O)

• Incorrect recipient information on the Bill of Lading

These minor errors can result in goods being held at the port or incurring fines .

Real-life Case Study

A timber export company in Binh Duong province sent a shipment worth $120,000 to the United States .

Due to an incorrect HS Code , the shipment was held by US customs for further inspection.

Consequence:

• Goods held at port: 8 days

• Container demurrage fee: $1,600

• Document correction fee: 900 USD

The total cost incurred was nearly $2,500 .

International shipping risks – when the logistics chain is disrupted.

Maritime transport accounts for over 80% of global trade volume .

However, international shipping always carries many risks, such as:

• Train delayed

• Container shortage

• Damaged goods

• Port congestion

These risks typically occur when global supply chains experience crises.

The impact of the Israel-Iran war on maritime transport and logistics.

Geopolitical conflicts in the Middle East, particularly the Israel-Iran war , have made many international shipping routes riskier.

The Strait of Hormuz is an extremely important shipping route because:

• Approximately 20% of the world’s oil passes through this region.

• Many container shipping routes from Asia to Europe pass through the Middle East.

As military tensions escalate, many shipping companies have to:

• Avoid dangerous areas.

• Redirect to a longer transport route.

• Applying a War Risk Surcharge .

This leads to a sharp increase in logistics costs and an additional 10-15 days in delivery times .

Logistics risk – shipping costs may increase dramatically.

In import and export, logistics costs include more than just shipping fees.

Businesses also have to bear many additional fees such as:

• Fuel costs

• Port congestion fees

• Container demurrage fees

• Parking fees

During periods of logistics crisis, container freight rates can increase from $1,500 to over $10,000 per container .

This is one of the factors that causes many export businesses to lose profits.

Exchange rate risk – currency fluctuations affect profits.

Most import and export contracts use USD or EUR as the unit of payment.

When exchange rates fluctuate sharply, businesses can suffer significant losses.

For example:

An export contract worth $200,000 .

If the exchange rate falls by 2% , the business could lose approximately $4,000 in converted value.

Legal risks – import regulations of each country

Each country has a different system of import regulations.

If businesses are not familiar with these regulations, their goods may be rejected for import.

Some common requirements include:

• Plant quarantine

• Quality standards

• Labeling regulations

• Import license.

In many cases, businesses have to re-export or destroy the goods .

Market risk – commodity price volatility

International commodity markets can be highly volatile, especially with:

• Agricultural products

• Metal

• Plastic materials

• Energy.

Geopolitical conflicts such as the Israel-Iran war could also cause oil prices and transportation costs to rise sharply , directly impacting global logistics costs.

Real-world case study: Vietnamese export businesses affected by logistics.

A cashew nut exporting company in Dong Nai signed a contract:

• 3 containers shipped to the Netherlands

• Contract value: $180,000

• Delivery terms: FOB Cat Lai

However, due to logistics congestion and the need to change the shipping route, the delivery time was extended by 12 days .

Consequences:

• Container demurrage fee: $2,100

• Parking fee: 800 USD

• The client requested a discount of $3,000 .

The total damage was nearly $6,000 .

Conclusion: Risk management is a vital element in import and export.

Import and export offer great opportunities for businesses, but also come with many risks.

In a volatile world – from logistics crises and geopolitical conflicts to the Israel-Iran war – businesses need to build a professional import-export risk management system.

Businesses should:

• Understanding the import and export process

• Strict control of documents

• Choose a reputable logistics partner.

• Monitor global economic and political developments.

For students majoring in logistics and import/export , understanding these risks will help them adapt to the industry more quickly and avoid common mistakes when working in businesses.