Domestic shipping firms take advantage of foreign block-out

In an effort to address increasingly serious capacity redundancy of Vietnamese container ships, in late March 2013 the Ministry of Transport (MoT) released Document 128/TB-BGTVT to eliminate 20 foreign flag-carrying ships capable of carrying 500,000 dead weight tonnage (DWT) from the domestic container shipping market.

The policy was very helpful to local shipping firms.

They had a good chance to regain market share of shipping lines that have an estimated value of VND1 trillion ($47 million) per year.

“It’s difficult for foreign ship owners to go against the decision, as it is defended by both the Maritime Law and WTO commitments on safeguarding the transportation rights of member states,” said Bui Thien Thu, deputy chairman of the Vietnam Maritime Administration (VMA).

Thu said most ship owners were satisfied with the competence and quality of transport services provided by local shipping firms in domestic shipping lanes.

The policy came at a critical time as 2,200 labourers from Vinalines – a national shipping leader – sat unemployed for the first six months of last year.

“Most of Vinalines’ container ships are now working stably in domestic shipping lanes,” said Bui Viet Hoai, the company’s deputy general director.

The VMA was required by the MoT to work with Vinalines, the Vietnam Shipowners’ Association and local ship owners to ensure goods were shipped quickly.

The shipping cost for a 20-foot container on Vietnam’s north-south line is around VND5.2 million ($247). This did not rise much against foreign shipping firms’ pricing as of 2012.

According to Le Viet Tien, director of Vinalines’ subsidiary Vietnam Ocean Shipping Joint Stock Company (VOSCO), though the firm was only achieving break-even on its expenses, they accepted this given that their ships and sailors were back to work.

Not only Vinalines, but also other shipping firms are running local routes such as Haiphong and Cai Lan to Ho Chi Minh City and Ba Ria-Vung Tau and back.

To meet the domestic container shipping market’s burgeoning demand, the VMA has licensed eight foreign ships to run local routes, as well as the 30 local ships. These fall under the management of Vietnamese firms.

At present, the ships moving south to north are operating at 80 per cent capacity, while those moving the opposite direction are only at around 50 per cent.

“This has been a good chance for domestic shipping firms to prove to ship owners that they can effectively operate the domestic [container shipping] market without foreign players,” said Vinalines’ deputy general director Bui Viet Hoai.