Vietnamese ships yielding to foreign ones on home market

Numerous ships and few goods have forced domestic fleets to “eat the bread of idleness”. Meanwhile, the appearance of foreign “big guys” on domestic transportation routes has pushed many Vietnamese ship owners to the verge of bankruptcy.

Having no goods to carry, ships sit idle

According to Bui Thien Thu, Deputy Head of the Vietnam Maritime Administration (Vinamarine), there are 1880 ships with the tonnage of 8.3 million tons in operation in Vietnam, ranking the 28 out of 169 nations which are the members of the International Maritime Organization (IMO).

Of this amount, nearly 500 ships run on international routes and more than 1000 ships exploit domestic routes. However, the fleet only can carry the volume of goods which is equal to 7.6 percent of the import-export and domestic goods, or 49.3 million tons, including 43.2 million tons for international transportation (87.7 percent), and six million tons for domestic transportation.

A paradox has existed that while the vast market with 90 million consumers has a huge volume of goods to carry, and maritime transportation is clearly less costly than road transportation, ship owners now complain that they do not have works to do.

Le Minh Khoi, Deputy General Director of Bien Dong Shipping Company, said that the capacity of ships is quite capable of meeting the demand for shipping. He said that only in November and December, ships can get enough goods to the full. Meanwhile, in the remaining months, Vietnamese ships, which run on domestic routes, always face the goods shortage.

Agreeing with Khoi, Do Minh Chau, Deputy General Director of Gemadept said that his domestic fleet sometimes sits idle. However, while Vietnamese ships cannot get jobs on domestic routes, foreign ships still can find lucrative jobs.

There are now 36 foreign flagged ships joining domestic shipping routes in Vietnam which have the total tonnage of 602.415 thousand tons. These include famous names in the maritime industry in the world such as Maersk lines or NYK.

Under the Vietnam Maritime Law, only when Vietnamese ships are not capable to carry goods, will foreign ships be able to join domestic transportation market. However, according to Bui Quoc Anh, Deputy General Director of the Vietnam National Shipping Lines (Vinalines), a lot of foreign shipping firms have been undertaking domestic shipping services. Under the masks of setting up joint ventures or cooperation agreements, foreign shipping firms have been “dodging the laws” and providing domestic shipping services.

“By following different ways, they (foreign shipping firms) have found the key that helps them penetrate the domestic transportation market, threatening the domestic fleet with the powerful fleet and competing with low fees,” a domestic shipping firm said.

Vietnamese flagged ships must get priority

The appearance of big foreign guys on the domestic shipping market has put domestic shipping firms on the tenterhook. A representative from Gemadept said that shipping firms are facing big difficulties on domestic routes because they have no goods to carry. Meanwhile, shipping firms do not dare to put their fleet into domestic routes because of the high expenses, low turnovers and because they cannot compete with foreign big shipping firms.

He said that foreign shipping firms have big capital and modern fleet, and can well manage the domestic shipping with international shipping; therefore, they can offer low fees. This explains why domestic shipping firms have to struggle to compete with them.

“If Vietnam continues opening the door to domestic routes to foreign shipping firms, Vietnamese shipping firms will find it difficult to survive,” the executive said.

Domestic ships’ owners have been calling government agencies to make further efforts to protect the right for domestic transportation in accordance with the maritime laws.

Nguyen Xuan Quy, Secretary General of the Vietnam Ship Owners’ Association has proposed the Ministry of Transport and Vinamarine to prioritize the domestic transportation for Vietnamese flagged fleets of Vietnamese shipping firms. In case Vietnamese flagged fleets cannot meet the demand of domestic transportation, the next priority will be given to Vietnamese enterprises which bear foreign flags. – Vietnamnet

Tags: Vietnam shipping industry