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Freight sector experiences difficulties

Update: February, 28/2012 - 10:09

HA NOI — The freight market was expected to experience more difficulties this year due to global economic turmoil and an oversupply of cargo vessels, according to experts.

Nguyen Canh Viet, General Director of Vinalines said this year would still be a hard year for the freight market and recovery couldn't be expected until sometime after 2012 when the world economy had a chance to recover.

To take advantage of the recovery, the domestic maritime industry should liquidate old and inefficient vessels to build capital for the purchase of modern vessels, said Viet, adding that Vinalines planned to buy more vessels with a total capacity of 150,000-200,000 dead weight tonnes (DWT) in the second quarter of this year.

"In 2012, freight charges on domestic routes and also routes from Viet Nam to other countries will not change significantly compared to 2011," Do Xuan Quynh, Viet Nam Shippers Council (VNSC) chairman told Dau tu (Investment Review) newspaper.

According to the VNSC, the container freight market would continue to reduce its fees. World trade activities had reduced, boosting the number of container ships waiting for cargo to 700 vessels.

Before Viet Nam had deep water ports, container ships were forced to collect Vietnamese goods through transport hubs in Hong Kong and Singapore before being transferred to larger vessels.

Now that Viet Nam has its own deep water ports, large cargo vessels can come here directly to drop off and pick up goods, meaning domestic container ships can now compete with foreign firms.

According to the Viet Nam Maritime Administration, 1,033 out of the total 1,633 vessels flying the Vietnamese flag have specialised their operations to domestic routes. Their main cargo is dry goods that weigh less than 5,000 DWT. The country has 38 container vessels, most with a capacity of less than 1,000 TEUs (twenty-foot equivalent units). Only two ships have transport capacity of more than 1,000 TEUs.

"We offer surplus tonnage for small vessels shipping dry cargo and containers but we lack specialised vessels and large vessels," said Nguyen Ngoc Hue, former director of the administration.

Shipping agents have also faced the pressure of high interests rates which have reached 23-24 per cent per year. These high rates had gobbled up a lot of shipping revenue, said Tran Thien, director of Bien Dong Transport Company. — VNS

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