01/09/2021
In 2020, despite being affected by the pandemic of COVID-19, the container throughput through seaports reached over 22 million TEUs, with nearly 700 million tons of cargo. However, Vietnam’s fleet only accounts for about 7% of the market share, the rest is in the hands of foreign shipping lines. Therefore, it is important and necessary to develop a large container fleet serving import/export.
Vietnam’s fleet only accounts for about 7% of the market share (Photo: Saigon Economy)
The Resolution of the 13th Party Congress has set out the goal that by 2045 Vietnam will "become a developed, high-income country", "arouse the aspiration to develop a prosperous and happy country"... To achieve this goal, economic sectors and businesses must set and implement strategic breakthrough tasks.
Among them, the Vietnam Logistics Business Association (VLA) is making efforts to bring the logistics service industry to a breakthrough, contributing to reducing logistics costs and improving the competitiveness of the economy in general and trade in particular in the context of extensive economic integration. One of the association's proposals is to develop a large container fleet for transporting Vietnam's import and export goods by sea.
Resolution 09/NQ/TW 9-2-2007 of the 10th Party Central Committee on Vietnam's marine strategy has identified a breakthrough in the marine economy, including a plan to develop Vietnam's fleet. Decision 221/QD-TTg, February 22, 2021 “Amending and supplementing Decision 200/QD-TTg dated February 14, 2021 on approving the Action Plan to improve competitiveness and develop services logistics in Vietnam to 2025", also set out the task of "improving maritime transport capacity".
Low market share
Vietnam has an important geopolitical position, located on the important maritime transport route of the East - West Hemisphere, accounting for over 80% of the global freight volume. About 90% of Vietnam's import and export volume is transported by sea. Volume of goods through seaports increases on average 13-15% per year.
In 2020, a difficult year due to the Covid-19 pandemic, but container cargo through the seaport reached 22,143,000 TEU, with 690 million tons of cargo. However, the Vietnamese fleet only accounts for about 7% of the transport market share, the rest is in the hands of foreign shipping lines. Vietnam's container ships mainly operate on short routes within intra-Asia.
Currently, the shortage of empty containers and soaring sea freight rates have severely affected import-export activities and competitiveness. 100% of freight by long-distance container shipping goes to pockets of foreign shipping lines’ owners
Therefore, the formation of a strong container fleet not only limits the pressure of foreign shipping lines on freight rates and surcharges, but in the long term is a tool to ensure the country’s economic security and to well implement FTAs signed with the EU, the U.S, Korea and Japan.
In order to build and develop a national container fleet, it is not possible to calculate profit and loss only in a short time, but must have a long-term vision (retaining the entire huge freight amount of about 90% of the volume of transported goods). by container ship going to sea), and this must be considered as an important measure to lower national logistics costs and improve competitiveness. This is also a measure to ensure the good implementation of the economic development of the country, a country with great potential in the marine economy.
Solutions
The actual situation requires Vietnam to quickly develop a fleet of large tonnage shipping containers, going far; a country with a fleet adequate to its sea economic potentials when compared to that of regional smaller countries such as Taiwan and Singapore.
Developing a fleet of large tonnage containers must be divided into phases. Phase 1 (2021-2025) has 2 - 4 large container vessels, newly built or buying used ships with the capacity of 50,000DWT - 100,000DWT, enabling to carry 4,000TEUs - 8,000TEUs. The following phases will increase the number of vessels sufficient to maintain weekly service. It is difficult to compete without having enough vessels to maintain liner service- fixed sailing day. If weekly service, the number of trains will be a multiple of 7. How much depends on the itinerary and route. However, at least (5×7) ships are required to maintain the US West Coast route and (6×7) ships for European ports.
Capital sources for development
The capital of private enterprises combined with the investment capital of the State, loan capital; calling for private corporations to joint exploitation of the container fleet or forming joint ventures… In the logistics sectors, it is possible to call on Gemadept, Saigon Newport, Vinalines/VIMC... and other large shipper enterprises. Currently, Vietnam has many private enterprises investing in modern fleets of airplanes, seaports, airports, and highways with huge capital...
Mechanism and policies:
It should be proposed that the State have a special mechanism and a number of major policies and guidelines that apply specifically to the relevant subjects, for example procurement issues, appointment of contractors, tax reduction and exemption, financial support in the early stages of fleet development. There should be incentives to encourage the training and employment of seafarers in order to attract Vietnamese crewmen to work on the ship for a certain period of time, hire foreign crew members to work with Vietnamese crew members...
It is necessary to cooperate with large shippers, such as textiles, footwear, furniture, seafood, etc., in ensuring the combination of import and export goods in large volumes for the fleet. Import-export enterprises with goods stored on ships will receive certain incentives. The role of the Ministry of Industry and Trade is important, especially when fully implementing new-generation Free Trade Agreements (FTAs). Enterprises providing logistics services have a close coordination in freight retaining. This is one of the conditions for a successful project.
To find effective solutions, the Association will actively discuss the above proposals with the Vietnam Maritime Administration, Vietnam's state management agency in charge of maritime affairs and major nuclear corporations. The difficulty is great, but not impossible. And, now is the best time, but the prerequisite is that the Government must approve a specific project with a specific mechanism, and determine to direct its implementation.
Saigon Economic Times online
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