Seaport ambitions fail to hold water

Despite some improvements, seaport joint ventures between foreign partners and state-owned shipping giant Vietnam Maritime Corporation continued to incur losses in the first quarter of this year, 

rendering profit targets practically unreachable amid the current global health emergency.

1943p16 seaport ambitions fail to hold water
Seaport ambitions fail to hold water

Nguyen Canh Tinh, CEO of Vietnam Maritime Corporation (VIMC), told VIR that VIMC is one of the logistics companies that have been hit the hardest by the ongoing health crisis. “Our seaports, logistics, and shipping business lines suffered in the first quarter of 2020, including our joint venture (JV) seaports due to interruptions in global trade links.”

Total container throughput shipped via Cai Mep International Terminal (CMIT) reached 414,000 twenty-foot equivalent units between January and March, leading to a total revenue of VND281 billion ($12 million) and a loss of VND1.4 billion ($61,000). The seaport, a JV between VIMC and Denmark’s APM Terminals in the southern province of Ba Ria-Vung Tau, saw its overall financial performance drop by 1 per cent on-year.

Similarly, the Cai Lan International Container Terminal (CICT), a JV between US-based Carrix and VIMC, saw an on-year fall of 85 per cent in container throughput during the same period, thus incurring a loss of around VND110 billion ($4.75 million).

Targets reachable?

With these drastic losses, CICT is VIMC’s worst-performing JV seaport. After reporting small improvements in 2018, the port witnessed a 47 per cent on-year drop in container throughput in 2019, resulting in 17 per cent less profit. The seaport is even forecast to face more difficulties in the coming months when more terminals are being put into operation at Lach Huyen International Seaport in the northern port city of Haiphong.

Meanwhile, this year’s first quarter was not rosy for SP-PSA, a joint venture between VIMC and Singapore-based PSA in the Cai Mep-Thi Vai area, which lost about VND50 billion ($2.15 million).

SP-PSA reported no container throughput, while its volume of goods in bulk fell 15 per cent on-year to around 710,00 tonnes. As a result, this JV recorded a revenue of VND36.3 billion ($1.6 million), equal to a mere 88 per cent of the same period last year.

Despite these losses, JV seaports somewhat improved during the first quarter of 2020. These improvements, however, are not ample enough to help them cover the huge losses incurred in the past and during the ongoing pandemic.

As shown in VIMC statistics, CMIT’s container throughput rose 8 per cent, while revenue went up 2 per cent. Also, CICT reported a 66 per cent on-year rise in the volume of goods in bulk and 66 per cent in its earnings before interest, tax, depreciation, and amortisation (EBITDA). With these figures, CMIT remains the most profitable JV for VMIC.

Meanwhile, SSIT – another JV between VIMC and SSA Marine in the Cai Mep-Thi Vai area – saw its volume of goods in bulk climb by 1 per cent on-year, while its revenue soared 49 per cent on-year.

 

“In 2019, VIMC’s total volume of goods shipped via its seaports reached over 106 million tonnes, up nearly 7 per cent on-year. This year, we aim to increase the figure to around 108 million tonnes. However, if the pandemic continues to spread, we will have to readjust our target,” Tinh of VIMC noted.

Promising divestment

Although CICT performed better this period, it had trouble attracting cargo for the following years. Therefore, VIMC still wants to offload its share in this JV.

“With mounting competition from Lach Huyen International Seaport, in the long term, CICT will be less competitive in both container throughput and goods in bulk. Possibly, we plan to divest our controlling stake,” Tinh elaborated.

This is good news for Carrix, SSA Marine, and other domestic and international investors who are eager to expand to and in Vietnam, where seaports attract the most foreign direct investment in the transport sector, thanks to the ability to control revenue sources, and favourable links to global supply chains.

Carrix, SSA Marine, and other players once showed their strong interest in buying stakes in the JV seaports when VIMC several years ago planned to divest state stakes in CICT and SSIT. Singapore-invested SP-PSA also wanted to raise stakes in VIMC while SSA Marine offered to buy VIMC’s entire stake in CICT. Their interest was damaged as the state-owned giant stopped the plan.

Industry insiders said that VIMC, which has stakes in 14 port companies and operates over 13,000 metres of piers with a total capacity of 75 million tonnes a year, is a springboard for international groups to venture further into the lucrative market amid growing trade.

Le Duc Khanh, director of market strategy department at PetroVietnam Securities, told VIR, “VIMC’s state stake divestment will be attractive to foreign partners, especially to those that are partnering in JV seaports. This is possibly successful as mergers and acquisitions are increasingly more attractive.”

According to the Ministry of Planning and Investment, such deals among foreign-invested enterprises rose 33 per cent in the first four months of 2020. Remarkably, the number of related deals among the US and EU partners grew significantly during the period, with those from the US climbing by nine times. Consultancy firms forecast that the trend will continue further, and seaports will benefit on the back of bilateral trade driven by the landmark EU-Vietnam Free Trade Agreement. VIR

Bich Thuy

Seaports struggle as imports drop from Europe, South Korea, ASEAN

Seaports struggle as imports drop from Europe, South Korea, ASEAN

Seaports are bearing negative impacts from the COVID-19 pandemic as the major partners of Vietnam are reducing orders. However, experts still see positive prospects.

Cargo through seaports grows despite virus

Cargo through seaports grows despite virus

The number of ships docking at Vietnamese seaports has fallen due to COVID-19 pandemic, but the volume of goods passing through the ports has recorded impressive growth.  

 
 

Other News

.
Hanoi moves towards approving construction of third Aeon Mall
Hanoi moves towards approving construction of third Aeon Mall
BUSINESSicon  05/07/2020 

The proposed construction of a parking lot and the Aeon Mall Hoang Mai Trade centre will soon be decided upon by the Hanoi People's Committee as Prime Minister Nguyen Xuan Phuc has approved the adjustment of the city's construction planning.

Pork and oil prices key to keeping inflation in VN under control: experts
Pork and oil prices key to keeping inflation in VN under control: experts
BUSINESSicon  05/07/2020 

With huge inflation pressure on the way in the remaining months of this year, a close watch must be kept on the prices of key products like oil and pork to hit the goal of keeping inflation below 4 per cent, experts have said.

US firms create record 4.8 million jobs in June
US firms create record 4.8 million jobs in June
BUSINESSicon  03/07/2020 

The reopening of businesses has spurred job growth but a rise in Covid-19 cases may hamper recovery.

Chubb Life Vietnam honored “Best Companies to Work for in Asia 2020”
Chubb Life Vietnam honored “Best Companies to Work for in Asia 2020”
BUSINESSicon  03/07/2020 

Chubb Life Vietnam has been recognized as one of the “Best Companies to Work for in Asia 2020” by HR Asia, the continent’s leading publication for Human Resources professionals.

VN government to sell stake in country’s biggest brewery
VN government to sell stake in country’s biggest brewery
BUSINESSicon  03/07/2020 

The Government will sell its 36% stake, equivalent to 230.8 million shares worth some VND37.6 trillion (US$1.6 billion), in the Saigon Beer-Alcohol-Beverage Corporation (Sabeco), the country’s biggest brewery, this year.

Fabric production an issue for Vietnam's textile industry
Fabric production an issue for Vietnam's textile industry
BUSINESSicon  03/07/2020 

Fabric production is a challenge for Vietnam's textile and garment industry when it comes to free trade agreements (FTAs) requirements on product origin.

Vietnam's FDI inflows to increase
Vietnam's FDI inflows to increase
BUSINESSicon  03/07/2020 

A new wave of foreign direct investment driven by global uncertainty such as the US-China trade war and the COVID-19 pandemic is imminent in Vietnam, 

Predatory debt collectors hustling on borrowed time
Predatory debt collectors hustling on borrowed time
BUSINESSicon  02/07/2020 

Debt-collecting businesses are to be banned in Vietnam as part of local government action to protect customers’ rights, with the upsurge of predatory lending services triggering heated debate and eroding public trust.

Proposal steers sports betting to starting line
Proposal steers sports betting to starting line
BUSINESSicon  03/07/2020 

A proposed national steering committee is expected to help Vietnam build clearer prize-winning entertainment rules and set up closer connections between government authorities and investors 

EVFTA will broaden skies for aviation across Vietnam
EVFTA will broaden skies for aviation across Vietnam
BUSINESSicon  03/07/2020 

Never-before-seen activities in Vietnam’s aviation sphere are expected to come to EU businesses soon on the back of the landmark EU-Vietnam Free Trade Agreement.

RCEP benefits on horizon for ASEAN
RCEP benefits on horizon for ASEAN
FEATUREicon  02/07/2020 

With the Regional Comprehensive Economic Partnership scheduled to be signed this November, doors will soon open to attract more investment and swell Vietnam’s trade with international partners.

An abundance of advantages to diversify ops into Vietnam
An abundance of advantages to diversify ops into Vietnam
BUSINESSicon  02/07/2020 

Amidst the new wave of foreign investment and relocation after the pandemic, director general of the Foreign Investment Agency Do Nhat Hoang explained Vietnam’s outstanding advantages and how it can seize arising opportunities.

Vietnam closes in on tech app tax avoiders
Vietnam closes in on tech app tax avoiders
BUSINESSicon  02/07/2020 

Apple and Google are once again under fire over tax avoidance in Vietnam, with none of their revenues from their app markets being retained in the country. However, a new law could soon enable local authorities to take their cut.

Drugmakers fight to attain approval
Drugmakers fight to attain approval
BUSINESSicon  02/07/2020 

Switzerland’s drug maker Novartis Pharma Services AG has announced a GMP qualification for Lek Pharmaceuticals d.d. within the scope of certification for medicines in Vietnam,

PouYuen lays off thousands  due to Covid-19 difficulties
PouYuen lays off thousands due to Covid-19 difficulties
BUSINESSicon  02/07/2020 

More than 6,000 workers of the Taiwanese company, PouYuen, in HCM City have been laid off due to the company's business difficulties during the Covid-19 pandemic.

Fitch Solutions revises up Viet Nam’s 2020 GDP growth
Fitch Solutions revises up Viet Nam’s 2020 GDP growth
BUSINESSicon  02/07/2020 

Fitch Solutions have revised up its 2020 real GDP growth forecast for Viet Nam slightly to 3.0 per cent, from 2.8 per cent previously.

Domestic demand the driving force for agriculture to develop
Domestic demand the driving force for agriculture to develop
BUSINESSicon  03/07/2020 

Nguyen Quoc Toan, director-general of the General Department for Agricultural Products Processing and Market Development, under the Ministry of Agriculture and Rural Development, 

Zalo Bank not licensed by SBV and MoIT
Zalo Bank not licensed by SBV and MoIT
BUSINESSicon  02/07/2020 

The State Bank of Vietnam (SBV) and the Ministry of Industry and Trade have affirmed that they have not licensed Zalo Bank to provide online built-in financial services.

EVFTA to come into effect in a month
EVFTA to come into effect in a month
BUSINESSicon  02/07/2020 

The EVFTA will abolish 65 per cent of the duties on EU exports to its developing partner, with the remainder phased out over a 10-year period.

Footwear sector to improve supply chain to take advantage of EVFTA
Footwear sector to improve supply chain to take advantage of EVFTA
BUSINESSicon  02/07/2020 

Vietnam’s leather and footwear industry should improve its supply chain performance to take advantage of the milestone trade deal that Vietnam has signed with the EU and to recover from the effects of the COVID-19 crisis, 

 
 
 
Leave your comment on an article

OR QUICK LOGIN