Shipping firms put vessels on sale to cut losses

With businesses negatively affected by the economic turbulence caused by high lending rates and soaring costs, many companies in the domestic shipping industry have to sell their vessels to cut losses.
According to Sai Gon Tiep Thi newspaper, most of the businesses in the shipping sector are operating with negative profits.

The Vietnam National Shipping Lines, for instance, last month posted the H1 loss of 660 billion dong (US$33 million), the first loss ever in 16 years of operation of this state-run company.

The Transport and Chartering Corporation also incurred a 28 billion dong negative profit in the second quarter of this year, while the South Vietnam Container Shipping JSC (VSG) this year targeted a … loss of 31.5 billion dong after suffering a bigger loss of 40.6 billion dong in 2010.

VSG posted a 20.1 billion dong loss in the first half of this year.

Analysts attributed the shipping sector’s losses to skyrocketing interest rates and fluctuating fuel prices.

There were not many goods to carry due to the economic downturn, while freight fees also dropped, they said.

Moreover, most of the vessels of the shipping industry are old and degraded and have low loading capacity, which make the domestic companies less competitive than their foreign counterparts.

Despite gaining negative profits, many businesses have managed to avoid losses by putting their vessels on sale.

For instance, Vietnam Ocean Shipping JSC sold its Vinh Long vessel, earning a 21.3 billion dong profit, which contributed to its after-tax profits of 805 million dong in the second quarter of this year.

Similarly, the Transport and Chartering Corporation covered its negative profits of 28 billion dong in Q2 with the money earned from ship selling.

For its part, Marina Hanoi also decided to sell all of its ships for debt clearance and switched to earning profits mainly from its Hai An Port and Hai An Office Building in the northern province of Hai Phong.

(US$1 = 20,830.00 Vietnamese dong) – Tuoitre

Tags: Vietnam shipping industry