Cai Mep provides a shelter for ships

In mid-March 2012, the Ministry of Finance (MoF) issued Circular 41/2012/TT-BTC guiding fee collections on big ships with a capacity of 50,000 dead weight tonnes (DWT) anchored in southern Ba Ria-Vung Tau province’s Cai Mep-Thi Vai port complex.
When ships land at Vietnam’s first international transit port they will enjoy a 40 per cent reduction in navigation fees and tonnage dues while pilotage fees will be halved against those regulated in MoF’s Decision 98/2008/QD-BTC.

The incentive is remarkable because for ships of above 100,000DWT landing on Cai Mep-Thi Vai port group, ship owners can save $5,000 in navigation fees, $1,536 in tonnage dues and at least $170 fee for each mile under pilotage.

Vietnam Maritime Administration (VMA) deputy head Bui Thien Thu said Circular 41 was an extension of fee preferences which were introduced by the MoF in late October 2010 and expired by the end of 2011 to attract big international ships to Cai Mep-Thi Vai port groups.

In early 2012, representatives from big international shipping firm alliances like OOCL, NYK and Hapag Lloyd AG, Maersk Vietnam, Yang Ming and K Lines filled petitions to the Ministry of Transport (MoT) asking for further fee incentives.

The representatives argued it was currently too costly for big ships to call on Cai Mep-Thi Vai just to load with several hundred 20-foot equivalent units (TEUs).

“If fees are not competitive, paring down the number of ships calling on Vietnam ports would be inevitable because shipping firms are in dire straits,” said Hanjin Shipping Vietnam general director Park Hoon.

Like shipping firms, foreign-invested seaport businesses in Cai Mep-Thi Vai area also proposed to hold on fee preferences for ships. In late December 2011, Cap Mep International Terminal Company Limited (CMIT) - a joint venture between Saigon Port Authority and Denmark-based APM Terminal - even sent a document to the MoT and VMA asking for fee reduction towards 15,000DWT ships.

“Cai Mep-Thi Vai port area is less charming as expected, causing headaches to investors who put several hundred million US dollars into port infrastructure development. Both port operators and shipping firms need further support from the state to weather the storm in the face of tough business climate,” said CMIT’s deputy general director Nguyen Xuan Ky.

VMA figures show that foreign ships calling on Cai Mep-Thi Vai port group has dived in recent years, driving port firms into a pricing race which had driven down loading/discharging fees to quite low levels.

“It would be a real problem if Cai Mep-Thi Vai port group lost its charm as an international transit port as by that time Vietnamese exports need to transit at ports in Singapore or Taiwan before heading to overseas markets,” said Thu.