VietNamNet Bridge - Vietnamese shipping firms have been losing their domestic market share to foreigners.

Many shipping firms have been repeatedly reporting losses

Vosco, one of the largest Vietnamese shipping firms, has been repeatedly reporting losses since 2012, though its revenue has been higher than VND1 trillion a year. 2014 was the only year when it reported profits, but the profit came from ship sales, not from services.

Vosco’s latest financial report showed that in the first nine months of 2017, it took a loss of VND231 billion.

The firm’s management board blamed the lower freight volume and higher costs on bad business results. As the ship supply continued to increase, the low rates for freight remained. 

And the price of fuel, a high proportion of operation costs, increased significantly.

Vinaship has been engulfed with prolonged debts. In 2017, the shipping firm collected VND600 billion in revenue, but incurred a loss of VND80 billion. 

As Vinaship has been taking losses for years, it has been forced to delist its shares from the HCM City Stock Exchange.

In April 2017, Vinaship shares were traded at a very low VND1,150 per share.

Vinconship Sai Gon has also been reporting losses since 2010 while Nosco has been taking losses since 2012. 

By the end of 2017, its accumulative loss had reached VND3.556 trillion and the stockholder equity had dropped to minus VND3.297 trillion.

Struggling to resurface

The heyday of the shipping industry was in 2006-2008. At that time, optimistic about market demand, shipping firms rushed to borrow money to build new ships.

However, they miscalculated business plans. Demand has dropped dramatically since then, and they need money to pay bank loan interest and ship maintenance fees.

Meanwhile, they cannot satisfy requirements from clients because their fleets are mostly bulk ships and lack container ships. 

In the domestic market, they have to compete fiercely with foreign large shipping firms which have great advantages, including logistics services, diverse marine routes and good container fleets.

An expert said that most Vietnamese shipping firms focus on exploiting dry and bulk cargo, but container transportation has become common globally. 

A report from the Ministry of Transport said that container ships account for 4 percent of the total fleet, while the remaining are bulk ships.

In order to become more competitive, Vietnamese shipping firms need container ships, better supply chains, infrastructure and logistics systems. But this seems out of reach for domestic firms. 

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Mai Thanh