Vietnam shippers urged to watch out for joint ASEAN market

TBKTSG Online

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The shipping market is part of a joint economy that the ten-member bloc planned to form in 2015, Do Xuan Quang, chairman of the Vietnam Logistics Association, said at a Ho Chi Minh City conference Thursday.

He said the market would face many opportunities and challenges now that Vietnam fully opened its logistics market to foreigners in mid-January.

Prof. Jose Lelis Tongzon, head of the logistics department at Inha University of South Korea, told the conference that Vietnamese companies will get to join a bigger market and engage in more cooperation and joint ventures for technology and experience exchange, Thoi bao Kinh te Saigon Online reported.

Shipment owners will have more options at lower prices and better quality from foreign partners, he said.

But the challenges will be huge as most Vietnamese shippers are small and medium-sized, according to analysts and industry insiders.

Competition will be harsher, narrowing profits, and small participants with poor services will easily be pushed out.

Tongzon said the basic changes Vietnamese businesses need to adopt to survive are cutting their fares and improving their services.

He said strong domestic cooperation with ports, store houses, and road transporters will be vital to help reduce costs.

Figures from the Vietnam Marine Administration showed that Vietnam as of the end of last June had built a shipping fleet of 1,788 boats with a total load of 6.9 million tons. But the government is set to filter that to some 4.7 million tons by 2015.

Of the current 577 ship owners, the 33 biggest ones are state-owned. Those state owned firms in 2013 reported increasing losses from the previous year.

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

Exports account for 12 percent of shipments, less than half of the 25-30 percent target, and mostly to nearby markets in Asia as local shippers compete poorly with foreign counterparts.

These difficulties prompted the transport ministry to recently ban foreign boats from domestic container shipping.

Industry insiders earlier said 2014 would be another hard year for Vietnamese shippers as oversupply will keep prices low and competition intense, while expenses continue to increase.

They said recovery depends largely on the stability of the global economy, particularly the amount of goods for shipping.

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