Vinalines proposes gov’t raise domestic carriers’ market share

November, 17/2016 - 09:00

Việt Nam National Shipping Lines (Vinalines) has proposed that the government increase domestic market share of import-export goods carriage on sea routes for Vietnamese fleet.

Vinalines has many difficulties developing its business as the global shipping industry is suffering a plunge in crisis. — File Photo
Viet Nam News

HÀ NỘI — Việt Nam National Shipping Lines (Vinalines) expects that the Government will increase the domestic market share in sea transport of import-export goods for the Vietnamese fleet.

The aim is not only to help Vinalines boost its equitisation but also domestic carriers maintain business in the country.

Sea transport is an indispensable part of the operation chain including sea ports and logistics, making a great contribution to enhancing competitiveness capacity of the maritime shipping industry as well as successfully implementing the country’s maritime strategy.

If the Government gives the nod, the domestic sea transport industry will not be dependent on foreign ship owners and Vietnamese goods owners would not have to suffer a plunge in prices when demand for transport of goods increases, especially seasonal goods such as rice, agricultural products and seafood.

According to a report from Vinalines, the industry has gone through a crisis with difficulties in three markets -- bulk carrier, container shipping and oil carrier. The recession began in 2008 and has touched its lowest level in the last 31 years. The corporation’s revenue is equal to 2.45 per cent compared with the highest level period.

In addition, the serious imbalance between demand and supply in the sea transport market, or the amount of goods carriage being reduced while the number of new ships has sharply increased, resulting in a gap of 30 per cent, has critically affected carriers.

Vinalines said the collapse of Hanjin Shipping Global in August plunged the industry into crisis and even the world’s leading shipping companies were unable to avoid losses. The CMA CGM Group, the world’s third-largest shipping company from France, announced consecutive losses in the first six months of this year. Meanwhile, leading company Maersk Line reported a loss of US$107 million in the first six months of this year.

Of the 12 leading shipping companies worldwide, 11 announced losses in the third quarter of this year.

It is predicted that the industry can earn revenue of $170 billion this year, incurring a loss of $10 billion.

In such a difficult situation world over, Vinalines said its fleet was capable of undertaking goods carriage for domestic giant corporations, such as Vietnam National Textile and Garment Group, Việt Nam National Coal-Mineral Industries Holding Corporation Limited, Electricity of Việt Nam and Vietnam Oil and Gas Group. However, access to transport was very difficult because of fierce competition with foreign shipping businesses.

The majority of the domestic market share on import-export carriage has been taken over by foreign shipping businesses and the remainder of some 10-12 per cent by the Vietnamese fleet.

This is because of the long-term habit of many cargo owners, who often buy goods based on the Cost, Insurance and Freight method or sell goods using the Free on Board (FOB) method.

Therefore, Vietnamese businesses have lost goods carriage rights and have to use shipping firms nominated by international clients.

In addition, there is little support and association among Vietnamese businesses. Many firms are just concerned about exporting their goods at the earliest, not caring to support the development of domestic fleets.

During the degradation period, many foreign shipping firms quickly restructured their fleets by investing in new, modern and fuel-saving carriers. Meanwhile, domestic private businesses bought new ships with low-interest loans thanks to support from local banks. Therefore, in the future, when the sea transport market recovers, Vinalines will have to compete with both domestic and foreign firms on domestic and foreign routes.

To overcome difficulties, Vinalines also suggests the Government direct domestic coal importers reserve the right of renting carriers using the FOB method while negotiating contracts with its foreign partners.

In the case of bidding when there is the attendance of foreign shipping firms, domestic companies should reserve 30 per cent of import-export goods carriage for Vietnamese carriers.— VNS