In Vietnam, firms cannot go to sea because of shortage of big ships

Since Vietnamese shipping firms have not made appropriate investments to develop container fleets, they have had to concede the container transport market to foreigners.

Sea transport is the fastest-growing transport industry in Vietnam, thanks to the advantageous geographical position and a long coastline of over 3,200 kilometers.

According to the Vietnam Maritime Bureau, the volume of goods shipped by sea increased sharply from 290 million tons in 2011 to 500-600 million in 2015, while the figure is expected to reach 1,000 million tons by 2020.

However, Vietnamese exports are carried by foreign shipping firms instead of Vietnamese. Clinker, a key export item of Vietnam, is mostly carried by shipping firms from Bangladesh, China and Hong Kong.

Vietnamese shipping firms cannot obtain contracts on shipping Vietnam’s rice exports, about 12,000-50,000 tons a year.

Vietnam’s plywood exports to China, about 10,000-20,000 BDMT (bone dry metric tons) per order are also carried by foreign firms. Sliced cassava and sand exports to Singapore are carried by Chinese firms.

Foreign companies also have the contracts on shipping import products such as coal, animal feed and materials for animal husbandry.

Analysts say Vietnamese shipping firms fail to obtain shipping contracts because they don’t have big vessels. Many vessels have been leased to foreigners, while others have been put up for sale.

However, it is not easy to sell the vessels. As most of the shipowners are finance companies, they don’t want to sell at low prices. But no one wants to buy the vessels with low quality at high prices.

Lacking big container ships, Vietnamese shipping firms focus on carrying bulk. However, even in this field, they are inferior to foreign competitors.

Cement and clinker exports in small quantities fitting 3,000-8,000 ton ships are carried by Vietnamese ships. However, most of the products are exported through intermediary parties – Singaporean trade companies.

Singaporeans, who are very experienced in the international market, always set clauses disadvantageous to Vietnamese shipowners in transport contracts.

For example, they require CQD (customary quick dispatch) under which goods owners retain 5-10 percent of the ship chartering fee.

In fact, Vietnamese shipping firms can obtain contracts to carry rice exports to Malaysia, Indonesia and the Philippines under government-to-government agreements, implemented by Vinafood 1 and Vinafood 2.

However, the contracts often contain load/discharging clauses unfavorable to shipowners.

The major jobs obtained by Vietnamese shipping firms are carrying some kinds of goods in small quantities within ASEAN countries, such as gypsum, feldspar, coal, steel, equipment and ore.

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