The Speedy Falcon anchored at Ha Long Bay. According to the Vietnam Maritime Administration, 43 vessels have been left for a long time to rust in various ports.
Dozens of multi-million dollar ships are rusting along Vietnam's coastline as problems continue to unfold in the shipping industry already reeling from the deep crisis that has engulfed two major state-owned groups.
According to the Vietnam Maritime Administration, 43 vessels, dubbed "ghost ships" by local media, have been anchored in various ports for years.
At least 14 idle ships have been spotted at major ports in Ho Chi Minh City and 11 others in the central town of Nha Trang.
Other seaport hubs including Quang Ninh and Hai Phong in the north and Vung Tau in the south each have several large ships standing abandoned.
One of them, Green Sea, has hardly left its docking spot in Quang Ninh over the past two years.
The 30-year-old vessel was bought by state-owned shipbuilder Vinashin in 2007. Vietnam does not allow such an old ship to be registered, so Green Sea has since carried a Panamanian flag.
Four sailors live on the ship these days. Their main job is to guard it and take turns to go out and buy food for other crew members.
A sailor said that the vessel, with a loading capacity of 76,000 tons, went through some repairs early this year before heading out for a couple of trips.
"For the last six months we have not been paid, and lucky for us we are still given meal money for watching the ship," he said, asking not to be named.
Not far away, PetroVietnam Transportation Corp.'s Speedy Falcon is also rusting.
Despite its name, the 32-year-old ship designed to carry 64,000 tons of cargo has not moved for some time.
Hoang Song Tung, who heads the Legal Affairs Department at the Maritime Administration of Quang Ninh Province, said it is unlikely the two ships will ever sail again.
Due to long inactive periods, both of them have deteriorated badly and no longer meet safety requirements, he said.
Experts say local shipping companies are now paying for a mistake they made in 2006-07, when the sea transport sector was booming and ship purchases were apparently no-brainers.
Firms rushed to buy a lot of obsolete vessels that could not even meet the relatively low Vietnamese technical standards.
A Vietnam Maritime Administration official said when the industry was hit by a sharp fall in demand due to the economic downturn, Vietnam had an oversupply of ships.
Shippers did not have enough goods to transport and had to struggle with high interest rates, he said.
Ta Quang Viet, deputy director of the Maritime Administration of Quang Ninh, said officials simply do not know what to do with the ships, which he called "floating iron chunks."
He said it is not easy to sell the ships now, not to mention the fact that they have been used as collateral for ealier bank loans.
"Our hands are tied now and we can only look at the ships lying dead in our area," he said.
The bad state of the ships reflects the condition of Vinashin and Vinalines, two state-owned giants originally believed to be capable of turning the country into a sea transportation power.
Vinashin, which builds and repairs ships, almost collapsed under the weight of huge debts in 2010. Eight senior officials were jailed earlier this year for various violations, including the purchase of an old ship that could not function well, causing a loss of VND470 billion (US$22.7 million) to the state budget.
The company continued to struggle this year as revenues in the first nine months fell sharply, equaling just 15.8 percent of its full-year target.
Meanwhile, state shipper Vinalines is also mired in huge losses, estimated at VND1.44 trillion ($69.5 million) for the first half of this year. Three officials, including former chairman Duong Chi Dung, have been arrested for violating state economic regulations.
Out of the 43 idle ships, five belong to Vinashinlines, a subsidiary of Vinashin that was transferred to Vinalines in 2010 in a desperate attempt to improve the situation.
Truong Van Tuyen, Vinashin Chief Executive Officer, admitted that it is a difficult task to sell assets in the shipping industry now, either to local or foreign investors. Since these are state assets, there are also many legal complications involved, he added.
But the problems do not just lie in old ships; several new vessels are also idling.
Dung Quat Shipbuilding Industry Company, formerly a Vinashin subsidiary, began to build a VND1.2 trillion ($58 million) ship in 2006 with the goal of completing it three years later.
The company, however, missed the deadline and could only deliver the ship last June to PetroVietnam Transportation Corp., now a sister company under oil and gas group PetroVietnam.
But in a headache-inducing development, the ship failed to meet international safety requirements after a test run. Now it will have to be repaired and upgraded, at an estimated cost of $4 million.
The case is by no means unique.
Another $63-million oil tanker is also being fixed at the Dung Quat Shipbuilding Industry Company, just because PetroVietnam now wants to use it as a floating storage facility, instead of a transportation vessel. The modification will require $20 million.
Dragging its feet
|Experts continue to express doubts over the restructuring process at state-owned shipbuilder Vinashin, saying almost two years have passed without any sign of recovery.
Nguyen Hoang Hai, general secretary of the Vietnam Association of Financial Investors, a group of 63 institutions including banks, insurance companies and funds, said Vinashin should not blame policies and market conditions for its failure to sell old ships.
If the group wants to cut losses, it has to sell the ships even at low prices, Hai said.
"There must be questions asked about Vinashin and Vinalines being so slow in dealing with the ships, and the Ministry of Transport has to be held accountable too," he said. "When a ship just lies there, losses will mount up."
"During a restructuring it's necessary to get rid of things that are not working and call for investment to reorganize business," Hai said.
The government in October 2010 approved a plan to restructure Vinashin, forcing it to focus only on three main fields shipbuilding and repair; supporting industries; and training. The 2011-2013 plan says the group has to make full use of its assets and divest from non-core business activities.
Vu Thanh Tu Anh, director of research at the Fulbright Economics Teaching Program in Vietnam, said Vinashin needs to narrow down production to keep only its best-performing shipyards.
The government should also consider attracting foreign investment for the industry, particularly from Japan and South Korea, he said.