VietNamNet Bridge – Foreign shipping agents are preferred over Vietnamese agents and the country’s fleet of 1,700 vessels, a report from the Vietnam Maritime Bureau (Vinamarine) shows.

About 40 foreign shipping firms doing business in the country handle 88 percent of the imports and exports, nearly 100 percent of which are container goods shipped to and from European and American markets.

As of June 2013, the Vietnamese fleet had 1,788 vessels of different kinds, ranking first out of 10 ASEAN countries. It also had another 80 ships flying with foreign flags, accounting for 15 percent of the total fleet’s tonnage.

However, the Vietnamese ships’ average load was relatively low, 3,960 DWT, the ninth lowest among 10 ASEAN countries.

The ships are owned by about 600 people or companies from different economic sectors. However, only 33 of them own fleets with total tonnage of over 10,000 DWT.

The other fleets are small privately run ones, mostly in Hai Phong, Can Tho, and Thanh Hoa and Thai BInh provinces.

Of the 33, 25 belong to state-owned conglomerates, including the Vietnam National Shipping Lines (Vinalines), PetroVietnam (the oil and gas group) and Petrolimex (the petroleum importer and distributor).

Vietnam has many small-tonnage ships and general cargo ships, while it lacks big-tonnage ships capable of running on international routes.

Domestic fleets can only take up 10-12 percent of market share.

China, Southeast Asia and Eastern Europe are the major markets targeted by Vietnamese fleets.

As a result, Vietnamese import and export companies have been heavily relying on foreign shipping firms.

Le Duy Hiep, deputy chair of the Vietnam Logistics Association (VLA), said this was why foreign shipping firms can impose unreasonable charges on Vietnamese goods owners. There are 12 such types of charges and surcharges.

High risks for insurers

A senior executive of a Vietnamese insurance company noted that since the Vietnamese fleet is old and has high risks, insurers require high premiums.

However, Vietnamese insurers still have problems with the old fleets and young, inexperienced crews.

He said the highest risks lie in the low quality of the Vietnamese fleets, the owners’ low management skills and the low qualifications of the crew.

A report from the Association of Vietnamese Insurers (AVI) showed that in 2011-2013, the hull insurance and ship owners’ civil responsibility insurance premiums dropped from VND1.85 trillion in 2011 to VND1.667 trillion in 2013.

For 11 consecutive years, until 2011, insurers incurred losses under marine and shipowners’ civil responsibility insurance operations, with compensation for damages always higher than the insurance premiums. For example, the rate was 107.7 percent higher in 2013 and 69 percent in the first half of 2014.

TBKTSG