State-run shipping group Vietnam National Shipping Lines has announced it made losses of US$117 million last year, admitting that it failed to see a falling market when buying additional ships over the past several years.
Revenues of the group, also known as Vinalines, dropped 14.3 percent from the previous year to $1.02 billion.
Vinashinlines, Bisco, and Falcon are among its subsidiaries that reported big losses.
Nguyen Canh Viet, general director of Vinalines, said the group had faced a slew of difficulties including financial capacity, business administration, and the market downturn.
He said the group failed at predicting an oversupply situation when it bought many ships over the past several years, resulting in shipping providers not being able to work at full capacity.
These factors, in combination with falling prices in the shipping market and huge loans from ship building, ended up with big loss it recorded in 2012, he said.
Vinalines expects the shipping industry to struggle more as the global shipping market will not rebound this year, he added, explaining that the local market will not overcome the oversupply situation before 2014.
The shipping group has 143 ships with a total loading capacity of 3 million DWT and plans to sell more old ships this year. It sold 10 ships in 2011.
Transport deputy minister Nguyen Van Cong had remarked earlier that Vinalines should sell its old ships soon to avoid bigger losses.
Meanwhile, Government inspectors are still conducting their investigation into Vinalines for fraudulent activities relating to the purchase and ineffective use of old ships. From 2010 to 2011, the group had incurred a loss of $182.3 million, but falsely reported profits.
Former Vinalines officials including Duong Chi Dung, General Director and Chairman between August 2005 and February 2012 have been arrested in connection with the investigation.
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