Shipping has peaked but port operations still grow: Gemadept

October 12, 2022 - 09:05
Gemadept, promoting investment in the Nam Đình Vũ project phase 2 to put into operation from the first quarter of 2023, has had positive results in the last nine months but is concerned about the next period.
Sea freight rates have peaked and shipping activities are returning to pre-pandemic levels. Photo courtesy of Gemadept

HÀ NỘI — Leaders at Gemadept forecast difficulties for the seaport industry in the last quarter and the first half of 2023 due to decreased demand for goods in key markets, but the firm's operation is still expected to growth

The firm, promoting investment in the Nam Đình Vũ project phase 2 to put into operation from the first quarter of 2023, has had positive results in the last nine months, expecting to exceed its commitment with the AGM 2022 with the better scenario.

Nguyễn Thanh Bình, General Director of Gemadept, told the seminar: "The potential of Việt Nam's seaport industry and advantages of Gemadept's sea freight rates have passed their peak and shipping activities began to return to normal as before the pandemic. Therefore, the profit of the shipping companies will decrease slowly and return to normal levels after two years of sudden results."

For seaport activities, Bình acknowledged that there would be a decline in the short term, adding: "There are many challenges in the coming time."

Specifically, he said the period until the first half of 2023 will be difficult in terms of freight due to the global recession, and demand in key markets such as Europe and the US is declining.

However, in the long-run, port operation would still have potential, he said, considering that with the growth potential of Vietnam's economy and trade agreements, along with the industry tendency positively supporting the development of deep-sea ports, the volume of goods passing through the port would still grow more.

He forecast the firm would still maintain the goal of 25 per cent profit growth per year from 2020 to 2025. As a result, by 2025, profit before tax would be three times higher than in 2020 and reach more than VNĐ1.5 trillion. The motivation would come from increasing container production through the Gemadept port system, which is expected to reach 5.9 million TEUs in 2025.

The company is promoting investment in Nam Đình Vũ project phase 2 to operate from the first quarter of 2023. The project was started in 2021 with investment capital of $75 million on a scale of 600,000 TEUs.

With Gemalink 2 completing the construction permit, it is expected to be completed this year and can start construction in the first half of next year. The project has a capacity of 1.5 million TEUs, and investment capital of $300 million.

In addition, Gemadept plans to develop a logistics project in the South with a scale of 10 hectares and an investment capital of VNĐ1.2 trillion, according to Bình. Enterprises will focus on investing in seaports, air cargo ports, inland waterway ports, logistics centres, and industrial parks.

Also, Gemadept will divest investments not part of the core business to create cash flow for project investment.

Chief Financial Officer of the firm, Bùi Thị Thu Hương, said in 2021, Gemadept exceeded the plan, with profit before tax growing by 57 per cent compared to 2020. This year, the business results in the first nine months were positive, despite concerns about the decline in the fourth quarter.

According to the firm, the cargo volume via Gemadept’s port network increased 26 per cent, much higher compared to 1 per cent growth of the whole country over the same period of 2021.

Regarding the issue of the US dollar and rising interest rates, Hương said the firm had dollar-denominated revenues from shipping lines, so the risk of exchange rate increases with dollar-denominated loans was significantly reduced.

According to the plan approved by the Annual General Meeting, the enterprise will issue 100.5 million shares to existing shareholders for VNĐ20,000 each with the ratio of a proper exercise of 3:1 to make the charter capital from VNDĐ3.014 trillion to VNĐ4.018 trillion. — VNS