VietNamNet Bridge – Vietnam’s fleet of ships are incurring losses even though 80 percent of goods are carried by waterways and seaways.

A report from the Vietnam Shipowners Association shows that Vietnam had 1,788 ships of different kinds by the end of 2013 with gross tonnage of 4.3 million GT and deadweight tonnage of 6.9 million DWT.

Vietnam also has another 80 ships flying with foreign flags, totaling 1.1 million DWT.

With such a number of ships and total tonnage, Vietnam is listed in the top 5 of ASEAN fleets. However, most of the ships Vietnam have are small, 3,960 DWT on average. Eighty percent of the ships have deadweight tonnage of less than 50,000 DWT. Only two ships, or 3.3 percent, have deadweight tonnage of over 150,000 DWT.

The most outstanding feature of the Vietnamese fleet is that it has too many small-tonnage ships which carry general cargo, while it lacks big ships capable of international routes and specialized ships capable of carrying bulk cement, chemicals or liquidized gas.

With such a fleet structure, analysts say the Vietnamese fleet now can undertake only 10-12 percent of the import-export transport market share (it was 33 percent in 2007), and can mostly ship goods to South East Asian or Asian countries. Meanwhile, nearly 100 percent of the cargo from Vietnam to Europe or America is undertaken by foreign shipping firms.

With weak capability, Vietnamese ships are at a disadvantage in their competition with the 40 foreign shipping firms present in Vietnam. These include famous names like Maerk Lines, NYK Lines, CMA, CGM and MSC, which hold 90 percent of the import-export market share.

Vinaship (VNA), a Vietnamese big shipping firm, has reported that its revenue in 2013 dropped to a three-year low. Vinaship’s CEO Vuong Ngoc Son cited a series of reasons behind the revenue fall and the VND107 billion worth of loss, including weak demand, low freight and high fuel costs.

VNA’s annual report showed that demand was weak in 2013 because of the low rice export volume to loyal markets like the Philippines, Malaysia and Indonesia. Meanwhile, the ship chartering fee set by VNA dropped sharply from $8,000 per day in 2012 to $5,500 per day in 2013.

At present, VNA still can lease some ships under fixed-term contracts (Vinaship Ocean, Vinaship Diamond, Vinaship Sea, Vinaship Pearl, Vinaship Star). However, Son said the average expenses on fuel alone would cost 35 percent of the total revenue from the transport services.

VNA is not the only shipping firm that has incurred losses. Most of the shipping firms listing shares on the bourse have also had losses repeatedly.

Nguyen Huu Huan, CEO of SSG, admitted at a shareholder’s meeting that SSG has had major difficulties in arranging working capital.

Shipping firms have tried to sell old ships to ease losses. However, VNA and Hai Au both reportedly were unable to sell several old ships last year.

DNSG