Vinalines thrives thanks to restructuring

Vietnam National Shipping Lines (Vinalines) has managed to get out of the woods after seven years of restructuring.
Vinalines thrives thanks to restructuring ảnh 1(Source: Shipsporting)

Hanoi (VNA) -
The Vietnam National Shipping Lines (Vinalines) plans to sell 11 old vessels with total tonnage of more than 230,000 tonnes this year.

The move is part of the corporation’s fleet restructuring efforts, said Acting General Director of Vinalines Nguyen Canh Tinh.

Selling old ships to cut loss

Since 2014, Tinh said Vinalines had implemented a strong restructuring of the transport fleet from 154 vessels to 81. The total tonnage of the corporation's fleet is currently more than 1.7 million DWT, with the average age of ships 16.7 years and the average tonnage 21,470 DWT per ship.

"The fleet restructuring plan has helped Vinalines resolve a number of old ships, which have large investment capital but exploited ineffectively. The shipping area has reduced losses by more than 70 per cent since then," Tinh said.

Amid an unstable shipping market, Tinh said Vinalines will continue to sell old ships to cut losses and improve business results.

In 2019-20, Vinalines expects to sell 23 vessels with total tonnage of about 500,000 tonnes.

"By 2020, Vinalines' fleet will have a total tonnage of about 1.1 million DWT, with the average age of ships about 14 years. Container ships will account for about 13 per cent of the fleet, liquid cargo ships about 9 per cent and dry cargo carriers and bulk cargo account for 78 per cent,” Tinh said.

Investment in a modern fleet

Along with selling old ships, Tinh said Vinalines will research and invest in a new fleet equipped with modern and fuel-efficient technologies.

It hopes to have four container cargos of 1,000 - 5,000 TEU size, three bulk carriers of 15,000 - 35,000 DWT, and one Supramax ship (50,000-60,000 DWT) joining the fleet, strengthening the corporation’s transport capacity and increasing competitiveness.

“With a modern fleet, Vinalines will carry out long-term COA (Contracts of Affreightment) with major partners to stabilise its shipping operation such as coal from Indonesia and Australia to Viet Nam, cement and clinker from Viet Nam to other countries,” Tinh said.

Vinalines will also work with seaport enterprises and logistics to design integrated services to create an all-in service supply chain that brings economic benefits to customers, he added.

Gains, losses generated by Vinalines

Over the years, Vinalines has focused on recovering production and business, as well as restructuring its debt. Thanks to seaport and maritime transportation services, the corporation has initially reduced losses. In 2018, its accumulated profits were estimated at about 130 billion VND (5.59 million USD), the best result Vinalines has recorded over the past five years.

In the 2010s, with a strong fleet with total capacity of 2.8 million tonnes, the corporation nearly dominated the domestic maritime transportation sector, contributing close to 4 trillion VND (172 million USD) to the State budget.

However, since late 2008, the global financial crisis and economic downturn have seriously affected the navigation sector, making maritime transportation fees drop sharply and turnover from the sector fall. As a result, Vinalines generated a loss and stood on the brink of demise. Given this, then Prime Minister Nguyen Tan Dung approved a project to restructure Vinalines during 2013-2015.

Tran Tuan Hai, head of Vinalines’s Development Strategy and Communications Division, admitted the biggest difficulty in restructuring lay with how to prove the feasibility of the project to State management agencies, and raise confidence of credit and banking organisations in Vinalines’s ability to improve its business and handle its debt.

According to Hai, the corporation’s debts exceeded 67.5 trillion VND (2.9 billion USD) in 2013 and its turnover was not enough to cover interest rates.

“Vinalines began restructuring its debt, keeping it balanced with the group’s assets, and transforming the debt into shares, while restructuring the fleet and divesting capital from loss-making businesses,” he said.

Nguyen Canh Tinh, Acting General Director of Vinalines, said in 2016-2017, the seaport and logistics sectors still earned profits although maritime transportation was facing difficulties.

“After four years of negotiations with banks, Vinalines’s total debt decreased from 67.5 trillion VND (2.9 billion USD) in 2013 to more than 20 trillion VND (860 million USD) in 2018, and cumulative losses contracted from more than 23 trillion VND (989 million USD) to about 3.2 trillion VND (137.6 million VND) during the period. The group began to generate profits from business and owners’ equity increased remarkably from over minus 8.7 trillion VND (374.1 million USD) in 2013 to nearly 8 trillion VND (344 million USD) at present,” he said./.


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