Shipping firms still lag behind in domestic transport market

Created 27 December 2017
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Half a decade has elapsed since the Ministry of Transport (MOT) opened up the domestic transport market, worth $50 million a year, to only Vietnamese enterprises.

vietnam economy, business news, vn news, vietnamnet bridge, english news, Vietnam news, news Vietnam, vietnamnet news, vn news, Vietnam net news, Vietnam latest news, Vietnam breaking news, shipping firms, VOSCO, MOT

vietnam economy, business news, vn news, vietnamnet bridge, english news, Vietnam news, news Vietnam, vietnamnet news, vn news, Vietnam net news, Vietnam latest news, Vietnam breaking news, shipping firms, VOSCO, MOT

Shipping agents are still facing difficulties


In an effort to help Vietnamese container shipping firms overcome difficulties in the period after the 2008 financial crisis, MOT in 2013 stopped granting licenses to ships with foreign flags to carry containers on domestic routes. 

The move was very helpful. In 2012, the Vietnamese fleet held 58 percent of domestic market share. In 2013, the figure rose to 80 percent after the move, and in 2014, it was 95 percent.

In late 2014, Vinamarine asked MOT not to resume licensing to foreign firms to carry containers on domestic routes. Since 2015, the Vietnamese fleet has been undertaking 100 percent of the transportation of goods in the domestic market.

Though the market is controlled by Vietnamese shipping firms, an increase in freight  has not happened as previously predicted. 

In early 2014, the average freight Vietnamese shipping firms offered to goods owners was VND5.2 million per 20-feet container for the north-south route, equal to freight foreign firms collected from goods owners in 2012.

In early 2014, the average freight Vietnamese shipping firms offered to goods owners was VND5.2 million per 20-feet container for the north-south route, equal to freight foreign firms collected from goods owners in 2012.

As domestic shipping firms have to compete fiercely with each other, the freight on the north-south route is even lower than the freight in 2014. 

In November 2017, VSICO quoted the freight of VND4.5 million per 20 feet container on its official website.

Though receiving support from the state, Vietnamese shipping firms still face difficulties. Vinamarine pointed out that the unhealthy competition in transportation fees is causing adverse effects to the business environment.

Meanwhile, shipping firms still struggle to survive.

Hung Dao Container (HDO), which specialized in making containers and semi-trailers, jumped into the domestic transportation market in 2012. In its 2015 financial report, the company admitted that sea shipping was the only one out of eight divisions which did not bring profit to the company. 

HDO had to leave the market just after four years of providing services. 

Nam Trieu (Nasico) is another name which left the market. Also, VINAFCO, a big name in the market, with a well invested fleet and good logistics infrastructure items, in 2016 had to sell a ship running on the HCMC-Da Nang route.

Meanwhile, Gemadept has repeatedly shown concerns about the continued decrease of freight and pointed out that ships have not been used effectively.

Source: Chi Mai - Bridge

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