Dec 4, 2012

Vietnam - Vietnam bars its door to foreign ships, monopoly may return

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VietNamNet Bridge – The Ministry of Transport has decided that from January 1, 2013, Vietnam will not renew the container transport licenses and will not grant new licenses to the ships which do not bear Vietnamese flags.

More jobs to Vietnamese shipping agents

The decision aims to protect the Vietnamese fleet which is facing big difficulties due to the capacity abundance.

With the decision, about 20 ships bearing foreign flags with the total tonnage of 500,000 DWT, running on domestic container routes, would be locked out.

Bui Thien Thu, Deputy Head of the Vietnam Maritime Bureau, affirmed that the decision absolutely comes in line with the Maritime Law and the WTO commitments on protecting the transportation rights of member countries.

Vietnam attempts to claim back 1 trillion dong from foreign ships

Once foreign ships are prohibited to run on domestic routes, they would not be able to earn one trillion dong a year, which also means that the sum of money would fall into the hands of domestic fleet.

In the past, the Ministry of Transport allowed foreign ships to provide shipping services on domestic container routes because the domestic ships then neglected the domestic market, while they were busy making money on international routes.

However, since the international shipping market has fallen into recession due to the weak demand, domestic ships have to return home to look for jobs on the home market. Meanwhile, it is not easy to regain the domestic market which has been controlled by foreign shipping firms.

According to Do Xuan Quynh, Secretary General of the Vietnam Shipowners’ Association, at least two container ships with the tonnage of 1000 TEU have been left idle, while the figure would be higher by the end of the year, when the Vietnam National Shipping Lines (Vnalines) receives three new container ships.

Thu said, due to the unprofitable business, a lot of shipping firms like Vinalines or Bien Dong (East Sea) have to sell ships. The Vietnamese fleet, which had 32 ships earlier this year, now has 24 ships only. Some ships have been chartered to foreigners at very low fees, while others have been left idle for the last many months.

Thu, while applauding the decision by the Ministry of Transport, has affirmed that the Vietnamese fleet is quite capable to satisfy the domestic demand and take over the jobs left by the 20 foreign ships.

Goods owners feel worried

While the Vietnamese ship owners feel excited about the new decision, Vietnamese goods owners feel worried stiff.

Secretary General of the Vietnam Goods Owners’ Association Phan Thong said he fears that the decision would generate the monopoly. Once the market is controlled by domestic shipping agents, they may raise difficulties to ship owners.

A representative of the Vietnam Textile and Garment Association (Vinatex) said that the closing of the door to foreign ships may not be the proper solution to help improve the Vietnamese fleet’s capacity.

He said that Vietnamese shipping agents have been less favored by domestic goods owners because they still cannot provide good services. Especially, in many cases, they cannot deliver goods on time and they charge overly high fees.

Deputy Minister of Industry and Trade Tran Tuan Anh has expressed his worry that if Vietnamese enterprises have to bear higher freights, their exports would be less competitive in the world market.

In theory, the Vietnamese fleet has abundant capacity; however, this does not mean that it’s easy to find service providers. It may happen that Vietnamese ships, which previously aimed to serve on international routes, cannot dock at Vietnamese ports. In other cases, they would refuse to provide services if the volume of cargoes is modest.

“If so, the export would go stagnant, and Vietnam would lose important markets,” Anh said.


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