Nov 17, 2012

Vietnam - Local shippers are all at sea

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The jury is out on whether Vietnam’s domestic shipping fleet is in a position to effectively tap local routes and take market share from foreign players.

“Vietnamese container ships are fully capable of superseding 20 foreign ships with strong visibility on local routes at present, including golden routes from Haiphong city, Quang Ninh province’s Cai Lan port in the north to Saigon ports and Cai Mep-Thi Vai port group in Ba Ria-Vung Tau province,” said deputy chief of Ministry of Transport’s Vietnam Maritime Administration (VMA) Bui Thien Thu.

But VMA figures show that only about half of the potential cargo capacity of Vietnam’s the current domestic fleet of 24 ships is being utilised.

Earlier, in a bid to tackle capacity redundancy of the local shipping fleet, the Ministry of Transport (MoT) enacted Document 5063/BGTVT-VT to temporarily restrict the role of some ships carrying foreign flags.

Accordingly, starting from January 1, 2013, the license of cargo ships not carrying Vietnamese flags on domestic routs will be temporarily halted. These ships currently transport about 3,000 twenty feet equivalent unit (TEU) each week on local routes.

“Foreign ship owners ought to follow the decision. Otherwise, the MoT’s move to honour priority on domestic ships comes on par with regulations in the Maritime Law as well as Vietnam’s commitment with World Trade Organization covering protection of member countries’ transport rights,” said Thu.

When the world shipping market was at its heyday, local shipping firms mainly ran on international routes. In that context, to fill up the void in the home market, state agencies gave the green-light to allow foreign ships to tap local shipping market.

“Decelerating world shipping business made local shipping firms return to the home market. At least two container ships with carrying capacity of 1,000TEU now sit idle at ports whereas three new container ships will join the race from late 2012,” said Vietnam Ship-owners Association general secretary Do Xuan Quynh.

However, industry experts assumed it would not be easy for local container ships to master local routes.

According to MoT Deputy Minister Nguyen Van Cong, many foreign ships offer very competitive shipping rates and possess state-of-the art equipment compared to local ships.

Besides, few local ships are reportedly willing to call on separate ports just to pick up small container amounts like foreign ships will.

Vietnam Shippers’ Council general secretary Phan Thong expressed concern that granting priority to local shipping firms would give birth to monopoly status and badly affect service quality.

“Vietnamese ship owners need to prove they are in a position to handle [container transport] services in local market in the face of fading competition from foreign ships,” said a local shipping firm executive.

Anh Minh |

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