VietNamNet Bridge – A lot of the enterprises in the maritime transport, the industry which has great advantages to develop and receives big investments, have been on the verge of bankruptcy.

Big losses besieging Vietnamese shipping firms   

VST has reported the loss of VND103 billion for the second quarter of the year, which is 6.3 times higher than the same period of the last year, raising the total accumulative loss in the first half of the year to VND146 billion.

The loss has been blamed on the weak demand in the maritime transport market with the BDI (Baltic Dry Index) down by 13 percent. In 2012, the company reported the loss of VND125 billion for the similar reason.

Holding 20 percent of the total shipping capacity and having 10 percent of the total fleet capacity, Vinalines is one of the few Vietnamese shipping firms which can compete in the international market. However, VOS, a subsidiary of Vinalines, still incurred the loss of VND196.5 billion in the first half, after it incurred the loss of VND32 billion last year.

Vinaship (VNA) has reportedly incurred the loss of VND68.5 billion in the first half of 2013. VSP took a loss of VND2 trillion in 2012 and VND2.8 trillion by the end of 2012. Hai Au, Southern Container and Dong Do have also listed themselves among unprofitable shipping firms.

Meanwhile, Nguyen Manh Ung, Deputy General Director of Portcoast, a consultancy and port design firm, said on Thanh Nien that it’s very difficult to find the solutions to the problems of Vietnamese shipping firms, because their competitiveness is far below the other regional firms.

Thoi bao Kinh te Saigon has cited a report of the Vietnam Maritime Bureau as saying that 53 ships have been abandoned by shipping firms at the Vietnamese territorial waters by July 16.

Just within a short period from December 2012 to now, the number of abandoned ships has increased by 10, from 43 to 53. The economic recession has led to the sharp fall in the demand for maritime transport, leaving a lot of vessels idle without goods to carry. Since the owners don’t get orders and don’t have money to charge fuel for the ships and ensure the basic needs for the crew, the ships have become “deserted.”

Will the Vinalines rescue succeed?

Analysts have every reason to keep doubtful about the feasibility of the rescue of Vinalines, the leading Vietnamese shipping firm. Vinashinlines, a subsidiary of Vinalines, has been let to go bankrupt. Other shipping firms have been heavily indebted and incurring big losses.

Deputy Prime Minister Nguyen Xuan Phuc in June 2012 stated that Vinalines would undergo a strong restructuring and focus on three main business fields – maritime transport, port development and maritime services.

In May 2013, the Prime Minister approved the plan on Vinalines restructuring. A steering committee on rescuing Vinalines has been set up.

Vinalines has been focusing on restructuring the fleet, liquidating old vessels to stop loss and get money for the investment projects to be carried out in a preparation for the market recovery. However, the restructuring has not gone far since then.

Dan Viet newspaper has quoted Nguyen Canh Viet, Vinalines’ General Director as saying that the sharp and prolonged falls of the maritime transport market since 2008 have been the biggest difficulty for Vinalines.

The freight fee has dropped by 14,000 points in July 2008 to 800 by the end of 2008, while the low index has been maintained so far. The world market is believed to escape from the crisis only from 2014 with the BDI hovering around VND1,500-2,500 points.

Compiled by C. V