Coastal Shipping in Vietnam

1.Coastal shipping competition

According Maritime Bureau, in 2015, although business activities of coastal shipping enterprise still had some difficulty, the total output reached 118.7 million tons, increasing 9.5% compared to 2014.

A Deputy Director of Vietnam Maritime Bureau, Mr Bui Thien Thu said that domestic shipping had taken charge of 100% of the domestic demand of coastal shipping. The domestic container ships has increased to 39 ships, a total increase of freight load is 200% from 2013 to 2015. The coastal shipping routes has transported 6.1 million tons of cargo including coal, slag, stone, rock, metal, fertilizers, cement, ore, fuel oil …

In 2015, output of goods in Vietnam’s seaport system continues an impressive growth, estimated at 427.3 million tons, rising 14.6%, in which the container reached 12 million TEUs, rising 15.5% compared to 2014.

According to Deputy Director of Bureau Bui Thien Thu, cargo volumes through Vietnam’s seaport system in 2015 in accordance with the approved plan in Decision No. 1037 of the Prime Minister in 2014 was 410 million tons. Thus, the volume outperformed 4.1% in 2015 compared with the initial plan.

However, the goods have been misallocated between different domestic seaports. To resolve this situation, there is a need to improve connectivity transport infrastructure and supporting services to relocate goods in different seaports, while speeding up the relocation of the port on the Saigon River and Ba Son shipyard.

During the year, Vietnam Maritime Bureau has completed the review and adjustment of detailed planning of port group 1, 2, 3, 4 and 6, thus managing the system more effectively. The Ministry of Transportation approved this plan.

By 2016, the total output of goods through the port system is estimated to reach 470 million tons (increasing 10% compared to 2015), in which each container is expected to reach 13.3 million, increasing 11% TEUs.

2.Vietnam Government published policy on Coastal Shipping, particular container services

In late May 3/2013, the Ministry of Transport has issued Document No. 128 / TB – BGTVT decision to terminate the operation of foreign fleets in terms of container shipping service in domestic routes, consisting of 20 units with a total tonnage of 500,000 DWT.

The foreign ship owners are not able to disapprove this decision since prioritising domestic fleets is compatible with the Law of the customs, as well as commitments to the world Trade Organization (WTO) on the protection of the members.

From 2013 to 2015, the fleets of Vietnam were given good opportunity to win back market share in terms of the domestic container shipping, which used to belong to the foreign shipping companies (with an estimated value of 1,000 billion / year). There are various container shipping companies gaining loyal leads which ground stable roots for domestic fleets.

Also Vietnam Maritime Bureau in collaboration with Ministry of Transport, Vinalines, Vietnam Ship Owners Association and Vietnamese ship owners operating on domestic routes ensure the limitation of congestion at seaport.

Average freight rates of Vietnamese fleet are offering customer around 5.2 million / 20-foot container for the north – south journey. This price is equivalent to the unit price of the foreign shipping company in 2012.

There have been more Vietnamese fleet being able to operate on domestic routes such as Hai Phong and Cai Lan to HCMC, Ba Ria – Vung Tau and vice again.

3.Vietnam regulations establishing who can and who cannot provide coastal shipping services, particular containers.

To ensure sufficient capacity to meet the demand for domestic container market, in addition to 30 domestic container shipping companies, Vietnam Maritime Bureau has also allowed 8 foreign fleets owned by Vietnamese enterprises to operate on domestic routes.

The biggest difficulty for domestic container shipping companies is that market has not completely recovered. Currently the container shipping companies from the South to the North reach approximately 80% of capacity, while the reverse route only reaches 50% capacity.

In long term, this policy has enabled the Vietnamese fleet to gradually recover from difficult period when all the domestic container shipping belonged to foreign companies.

Finding the right business partner in Vietnam is also important. We recommend doing research on the reputation of the company and individual shareholders, corporate or individual, gathering publicly available company information, and performing background checks on key personnel to find potential risks in cooperation. Working with a reliable partner can help achieve economic benefits, saving time and money in business.

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