Shipping firms in rough seas

“Shipping fees in most local as well as international routes will only fluctuate in a tight range in 2012 against 2011,” said Vietnam Shipowners’ Association chairman Do Xuan Quynh.

According to association analyses, container transport prices were down due to global weakening trade. Ships lying idle have become commonplace, particularly big ships.

Idle container ships amount to 700, many of them report a carrying capacity of above 3,000 20-foot equivalent units (TEUs).

“In case the fare is upwardly revised, the beneficiaries would be foreign shipping firms, but not local ones,” said Quynh.

Vinamarine statistics show that of 1,633 ships carrying Vietnamese flags 1,013 ships with a total carrying capacity of nearly three million dead weight tonnage (DWT) capacity mostly run local routes and most of them are dried cargo ships of less than 5,000DWT capacity. Of 38 container ships, only two have a carrying capacity of above 1,000TEUs. The remaining ships report a carrying capacity of less than 1,000TEUs.

“We see capacity redundancy in the segment of smaller dried cargo and even container ships while specialised and big ships are in short supply,” said Vinamarine former chief Nguyen Ngoc Hue.

In fact, when Vietnam does not have deep-water ports, local container ships mainly brought cargo from Vietnamese ports to transit ports in Hong Kong or Singapore for foreign ships.
When Vietnam built deep-water ports, foreign ships directly anchor at Vietnamese ports to receive goods. Local container ships mainly run local routes or hire to foreign parties at low costs. Actual demands to lease ships of this size are not large also.

“This yea is still full of hardships to the shipping sector,” said Vinalines general director Nguyen Canh Viet.

Vinalines’ ship fleet currently reports 3.4 million tonne carrying capacity, including 795,000 tonne capacity transferred from embattled Vinashin. Many ships of huge investment value are struggling to find customers.

“Shipping firms face mounting pressures on the back of 23-24 per cent, per year lending rates. Paying the borrowing cost for a VND30-40 billion ($1.4-$1.9 million) loan package to buy a 20,000DWT ship almost eats up the ship revenue,” said Bien Dong Shipping Company director Tran Thien.

Viet of Vinalines assumed shipping industry could resume growth pace after 2012 when the world economy gets back on track. To grasp new development opportunities, parallel to liquidating old ineffective ships Vinalines is mulling buying several used ships with 150,000-200,000DWT total carrying capacity in the second half of 2012.