Philippines - Vietnamese ports suffer losses due to competition

The bruising competition among port operators in Viet Nam is forcing them to constantly undercut each other and sustain losses they cannot afford, a situation for which the industry blames the lack of government oversight.

The Viet Nam Seaports Association (VPA) said Vietnamese ports, which provide the same quality of service as those in neighbouring countries, charged the lowest rates.

They charge a mere US$32 per twenty-foot equivalent units (TEUs) compared to USD$55 in Thailand, US$76 in China and US$117 in Singapore.

Port operators have calculated that ports in Ba Ria-Vung Tau, for instance, need to charge at least $88 to break-even but only charge US$32.

The VPA blames the Ministry of Finance for not applying a floor price to prevent undercutting.

It has sought not only a floor price but also for the government to play the central role in managing seaport investment and other maritime activities like foreign investors' role in port management.

These are part of its efforts to gradually build a roadmap for creating a single market for port fees, it says.

Shippers dictate prices now mainly because unplanned development of ports has meant they are situated close to each other in many parts of the country.

In the central region, for instance, they are situated just 20-30km from each other on average. In the Dung Quat Industrial Zone alone, there are four deep-sea ports.

The result has been a loss of US$32.5 million from container traffic alone for the industry.

If rates fall by 15 per cent again like they did last year, the loss will rise to US$34 million this year, the VPA estimates.

All this threatens to give control to foreign investors who are partners in many ports, Tuoi Tre newspaper warned in a report.

At the VPA's annual meeting in Ho Chi Minh City last week, a representative of the Hai Phong Seaport Company Ltd said the undercutting in the industry was due to the Government's failure to exercise control.

On average, container rates have declined by 15-20 per cent in the last few years, with some ports even cutting prices by 30 per cent. A representative of a leading central port said this year his port had to cut rates by nearly 20 per cent.

Ho Kim Lan, president of the VPA, blamed ports in Ba Ria-Vung Tau–who lead the country in terms of technology and investment–for initiating the fee cuts and forcing others to follow.

But the VPA blames this on the large number of ports that have been built in the region in the last few years.

As a result, the cluster, which can accommodate ships of up to 130,000 tonnes, works at a mere 20 per cent capacity.

In 1999 the government approved a master plan for the development of the country's port network through 2010, and under this more and more ports are being renovated to meet international standards.

Philippine Daily Inquirer

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