>> Vietnamese shipping firms struggle to compete
Many Vietnamese shipping firms have been forced to sell their ships in order to cover mounting losses.
 Many Vietnamese shipping firms have been forced to sell their ships in order to cover mounting losses. |
Nguyen Thanh Nien, owner of a shipping company in Haiphong, said, “Most local shipping companies are receiving less business, but still face higher costs. This is putting them into a position where they have to sell their ships to cover losses and pay interest on loans.”
Sales to offset loss
According to the Vietnam Maritime Administration, Vietnam has over 1,880 ships, ranking fourth among Asian countries. Meanwhile, only 400 of them run international routes, while the rest operate domestically.
Giant shipping companies have spent tens of millions of USD to buy large ships for international transport. Vietnam Shipping Company (Vinaship), in particular, poured capital into buying ships, assembling one of the biggest fleets in the region.
But since late 2009 the maritime transport sector has become sluggish, and competition from foreign rivals, such as Maesk, Cma and Hapag-Loyd, is fierce.
A member of Vietnam Ship-owners’ Association said that during the period between 2003 and 2007 companies were rushing to build up their shipping fleets, but now that trend has reversed.
A financial report from Vosco Trading and Service Joint Stock Company (Vosco) indicated that, since late 2010, the company sold four ships.
The Vietnam Sea Transport & Chartering Joint Stock Company (Vitranschart) has decided to sell two of their ships, the Phuong Dong I, for (USD2.78 million) and Phuong Dong III, for USD2.8 million.
Petrolimex Petroleum Water-Way Transportation Joint Stock Company and Vietnam National Shipping Lines (Vinalines) face similar situation.
Losing market share
General Secretary of the Vietnam Freight Forwarders Association Nguyen Hung said foreign rivals with strong financial backing have dominated the regional shipping market.
He added that Vietnamese container ships make up only about 20% of the domestic transport market share. Many of these companies\' vessels are aging and have low capacity. Most of them transport to larger ships at ports in Singapore, Macau and Hong Kong, he said.
Do Xuan Quynh, General Secretary of Vietnam Ship-owners’ Association, said, “Currently, these companies are getting rid of their old ships to ease their current financial problems. But if they do not reinvest in new ones, their capacity will only decrease. This is the real challenge they face; how to compete with foreign shipping firms without losing money."
An economist said selling ships is just a temporary measure, is not a good strategy for long-term profit.
Vosco and Vitranschart planned to buy new ships after selling old ones, but they have yet to do so because of financial difficulties.
