Vietnam shippers face another hard year amid supply surplus

TN News

Email Print

Industry insiders say 2014 will be another hard year for Vietnamese shippers as excessive supply keeps prices low and competition intense, while expenses continue to increase.

Trinh Quoc Dat, chairman of Diem Dien Sea Transport Association in the northern province of Thai Binh, said business has been slow since 2011 and that smaller members began “dying” last year.

The association groups more than 100 ships, a third of which ply on overseas routes and have almost no business since they cannot compete with their foreign rivals.

Figures from the Vietnam Maritime Administration showed that domestic shippers only account for 10-12 percent of international business, most of it to nearby markets in Asia.

Ship trips to and from local ports in 2013 dropped to 87 percent of the previous year.

Dat said domestic routes were not doing much better.

Rice exports across the Chinese border closed in January, ending one major route of rice shipments from south to north.

Another route transporting coal from north to south received few orders last year.

As there are no goods, each ship is making losses: the bigger the ship, the higher the losses, he said.

He added that while they have no business, ship owners have to suffer high interest rates, while red tape problems prevent them from filing bankruptcy.

“Giant state-owned transporters will be allowed to clear their debt or delay paying it, but we private firms do not get to enjoy those policies.”

The state shipping giant Vosco had reported nearly VND200 billion (US$9.48 million) in losses in 2013, and another major transporter, Vinaship, VND108 billion, up from VND28.3 billion in 2012.

Vietnam Sea Transport and Chartering JSC lost VND226 billion, almost twice its losses in 2012.

A source from the maritime administration said 2013 was a difficult year for ocean shippers as prices remained low.

Nguyen Van Quynh, chairman of Vietnam Ship Owners’ Association, said there doesn't seem to be much light at the end of the tunnel for the market in 2014 either.

Quynh said the transport ministry’s recent ban on foreign boats from domestic container shipping is good news of some sort, but “the market recovery depends largely on the stability of the global economy, particularly the amount of goods for shipping.”

Vietnam National Shipping Lines (Vinalines) has also forecast that supply in the 2014 - 2015 period will continue to surpass demand and prices will continue to stay low, currently three times below 2008’s, but the cost for running ships will increase.

Vinalines has proposed that the government and the transport ministry extend loans and reduce interest as well as provide other priorities and protection to pick up local shippers.

But experts said the shippers also need to help by improving their own fleet and getting rid off old and ineffective ships.

Vietnam is set to filter its ocean shipping fleet to some 4.7 million tons by 2015.

Like us on Facebook and scroll down to share your comment

More Business News