The Vietnam National Shipping Corporation (Vinalines) recorded a loss of 660 billion VND (32 million USD) in the first half of this year, the first time ever in its 15 years of operation, said General Director Nguyen Canh Viet.
Viet said that his corporation has lost revenue despite the fact that its three core services - marine transport, ports and logistics - have experienced an increased revenue of 5 percent to 492 million USD in Q1.
Trade experts attributed the losses to the sharp decrease in freight rates, high fuel and interest rates, fluctuation of exchange rates and inadequacies in the mass development of vessel fleets at the same time. As a result, Vinalines' loss is inevitable, they said.
Vinalines holds 70 percent of tonnage of the nation's vessel fleet. In 2009, the marine transport market got the lowest rates within 20 years, but Vinalines still generated a profit of 300 billion VND (14.5 million USD).
Of the 660 billion VND in losses, Vinalines' business accounted for 507 billion VND, and five businesses transferred from the Vietnam National Shipbuilding Industry Group (Vinashin) suffered a loss of 153 billion VND.
The highly anticipated joint ventures between Vinalines, Sai Gon Port and foreign partners, including newly-operational SP-PSA International Port Co Ltd and Cai Mep International Port Co Ltd (CMIT), also reported a loss of 400 billion VND (19.4 million USD).
SP-PSA International Port Co Ltd attributed the loss to low container service charges at the Cai Mep-Thi Vai, which were not managed effectively by authorities of the ports.
Vinalines, as well as many major carriers around the world, was victim of an investment bubble on fleet development based on a virtual index of demand and freight charges over the last five years, said Bui Quoc Anh, Deputy General Director of Vinalines.
The pressure on shipping companies was great, due to the lending interest rate of 21-22 percent a year. The interest payment is high for an investment of between 30 to 40 billion VND (1.5-1.9 million USD) on a 20,000DWT vessel, and does not even include the lease term of partners' vessels below the production prices, said Tran Thien, Director of the Bien Dong Marine Transport Company.
To help Vinalines resist and overcome the difficulties, Viet said the Government should allow the company to increase its charter capital from 8 trillion VND (388 million USD) to 12 trillion VND (582 million USD) and ask the Finance Ministry to up financial assistance from 1 trillion to 2 trillion VND (48.5-97.1 million USD).
To minimise losses by late 2011, many marine transport enterprises have conducted solutions to raise their service quality and restructure their fleets.
However, these solutions depend greatly on the recovery of the local and foreign maritime transport markets. Vinalines has predicted that marine transport market in Q3 will fall sharply before recovering slightly in Q4 this year.
In such context of a dismal marine transport market, selling old vessels to restructure is very difficult. Furthermore, many businesses either did not have ships or continued suffering loss in the last 2 to 3 years thus forcing them to sell their fixed assets, Thien said./.
Viet said that his corporation has lost revenue despite the fact that its three core services - marine transport, ports and logistics - have experienced an increased revenue of 5 percent to 492 million USD in Q1.
Trade experts attributed the losses to the sharp decrease in freight rates, high fuel and interest rates, fluctuation of exchange rates and inadequacies in the mass development of vessel fleets at the same time. As a result, Vinalines' loss is inevitable, they said.
Vinalines holds 70 percent of tonnage of the nation's vessel fleet. In 2009, the marine transport market got the lowest rates within 20 years, but Vinalines still generated a profit of 300 billion VND (14.5 million USD).
Of the 660 billion VND in losses, Vinalines' business accounted for 507 billion VND, and five businesses transferred from the Vietnam National Shipbuilding Industry Group (Vinashin) suffered a loss of 153 billion VND.
The highly anticipated joint ventures between Vinalines, Sai Gon Port and foreign partners, including newly-operational SP-PSA International Port Co Ltd and Cai Mep International Port Co Ltd (CMIT), also reported a loss of 400 billion VND (19.4 million USD).
SP-PSA International Port Co Ltd attributed the loss to low container service charges at the Cai Mep-Thi Vai, which were not managed effectively by authorities of the ports.
Vinalines, as well as many major carriers around the world, was victim of an investment bubble on fleet development based on a virtual index of demand and freight charges over the last five years, said Bui Quoc Anh, Deputy General Director of Vinalines.
The pressure on shipping companies was great, due to the lending interest rate of 21-22 percent a year. The interest payment is high for an investment of between 30 to 40 billion VND (1.5-1.9 million USD) on a 20,000DWT vessel, and does not even include the lease term of partners' vessels below the production prices, said Tran Thien, Director of the Bien Dong Marine Transport Company.
To help Vinalines resist and overcome the difficulties, Viet said the Government should allow the company to increase its charter capital from 8 trillion VND (388 million USD) to 12 trillion VND (582 million USD) and ask the Finance Ministry to up financial assistance from 1 trillion to 2 trillion VND (48.5-97.1 million USD).
To minimise losses by late 2011, many marine transport enterprises have conducted solutions to raise their service quality and restructure their fleets.
However, these solutions depend greatly on the recovery of the local and foreign maritime transport markets. Vinalines has predicted that marine transport market in Q3 will fall sharply before recovering slightly in Q4 this year.
In such context of a dismal marine transport market, selling old vessels to restructure is very difficult. Furthermore, many businesses either did not have ships or continued suffering loss in the last 2 to 3 years thus forcing them to sell their fixed assets, Thien said./.
