mai hien
MARINE NEW


FIERCE COMPETITION IN SHIPPING INDUSTRY PREDICTED FOR 2019
Thursday, 07 March 2019 07:04

Total goods exchange output will increase rapidly, bringing opportunities to Vietnam’s shipping firms, experts said at a seminar on container maritime transport, held on the occasion of the launch of a book on maritime transport in Vietnam by leading expert Lars Jensen.

Vu Dang Duong, chief of the team of translators of the book, said the difficulties faced by big and small shipping firms kicked off an M&A movement. The decision by shipping lines to consolidate alliances was a way for them to cope with uncertainties in the near future.

More M&A deals will be made in the time to come, but the M&A wave is entering the final stage and there will not be big deals. Shipping lines will intensify the use of high technology to cut costs and the labor force.

Jensen believes that marine transport will see big changes in the way it is operating.

Dung said the changes will affect Vietnam’s shipping industry and container port exploiters in key economic zones, as well as over 3,000 logistics firms.

Nguyen Xuan Vinh, CEO of Maritime Connections, believes that in 2019 and upcoming years, marine container transport will continue to develop, creating cutthroat competition among large shipping firms in the world.

Shipping firms will have to build large ships to be able to carry more goods, which will help cut costs.

Analysts think the US-China trade war will benefit enterprises which export products from Vietnam to the US. Foreign direct investment into China will be redirected to Vietnam and neighboring countries.

If so, Vietnam will need to import more materials to make products for export and the demand for container maritime transport will increase.

The attendees at the seminar expressed concern about problems in Vietnam’s shipping, saying that the lack of cooperation among shipping firms still had not improved.

Cooperation agreements between Hai An Group and Tan Cang Shipping, and between Vinalines and Bien Dong, have been made. However, the link among Vietnamese firms is loose compared with M&A activities among Japanese, South Korean and Chinese firms.

While some experts warned of problems to arise if Vietnamese shipping firms cooperate with foreign partners, Duong believes that it should be encouraged.

He cited success stories about the cooperation between Vietnamese and foreign enterprises. Tan Cang Cai Mep international port was one example.

The Vietnam Logistics Association (VLA) says that logistics costs in Vietnam are 16-17 percent of GDP, while some international institutions say the figure is 20.9 percent.

 
NEW MECHANISMS TO KEEP MARITIME TRANSPORT SECTOR AFLOAT
Monday, 04 March 2019 07:07

Although there have been some positive signs in recent years, Viet Nam’s sea transport sector still face difficulties with many enterprises suffering heavy losses. The maritime industry is proposing support mechanisms to help the sector out of its stagnant state.

In 2018, Vietnam National Shipping Lines (Vinalines) recorded strong growth in sea transport volume with an increase of more than 13 per cent, reaching 24.3 million tonnes. This figure shows solid growth from when sea transport hit its floor a few years ago.

However, acting general director of Vinalines Nguyen Canh Tinh said the sector still faced challenges because, due to shipping supply surpluses, freight rates were only one-tenth of what they were in 2008.

The Philippines and Malaysia, traditional destinations for Vietnamese shipping fleets, have low profit margins. For routes with higher margins such as the Republic of Korea, Japan and North China, many Vietnamese ships did not meet the strict requirements to enter the ports, Tinh said. This made it difficult to access these higher-value markets.

Vu Duc Ngo, director of Vu Gia Tam Trading and Transport Co., Ltd, said that since 2009, shipping activities suffered heavy losses.

Unreasonable structure

According to Trinh The Cuong, head of Shipping and Maritime Services under the Viet Nam Maritime Administration (VMA), the total volume of transport carried out by Viet Nam’s fleets in 2018 was more than 144 million tonnes, an increase of nearly 11 per cent year-on-year, accounting for 55.6 per cent of the total turnover of all modes of transport.

However, Cuong said the structure of Viet Nam’s shipping fleet was not reasonable. While general cargo ships and bulk cargo ships accounted for more than 70 per cent of the total tonnage, container ships only accounted for 3.6 per cent (41 ships).

In order to support shipping enterprises, VMA is asking the Ministry of Transport to propose the Government develop supporting policies and exempt shipping companies with large and modern fleets from taxes.

VMA will build commodity and transport trading floors to make use of cargo ships on domestic routes.

The Ministry of Transport will also propose to the Government a number of policies to facilitate shipping enterprises in the country. These include lending shipping enterprises investment capital, upgrading fleets from development investment funds, exempting import taxes for supplies and equipment to repair ships that Viet Nam has not yet produced, reducing corporate income taxes and import taxes on ships and eliminating personal income tax on salaries of officers and crew members working on seagoing vessels in inland transport.

 
OVER US$3 BILLION PROPOSED FOR BUILDING DANANG URBAN RAILWAY NETWORK
Friday, 01 March 2019 02:00

South Korea's Seoul Metro Corporation on February 21 proposed spending over US$3 billion on construction of an urban railway system in Danang, including metro and tramway lines, during a meeting with the Danang City municipal government, Thanh Nien newspaper reported.

Under the tentative plan prepared by the corporation, the proposed railways are expected to cover the central area of the city, linking beaches, the airport and main roads. The railway network is aimed at meeting transport demands in two North-South and East-West directions.

The projected South-North tramway line, to stretch 8.38 kilometers, will require an estimated investment capital of US$173 million, linking the eastern bank of the Han River and Ngu Hanh Son (Marble Mountains), while the 8.82 kilometer South-North tramway line will also receive funding of US$173 million, stretching from the western bank of the Han River to the south wing of the airport and the northern region of the sea.

The East-West metro line, with an expected cost of  US$2.3 billion, will run from the center of Thanh Khe District and Hai Chau District to East Sea Park.

Also, the firm proposed prioritizing construction of the East-West tramway line, which will run for 8.24 kilometers and connect My Khe Beach with the airport, and the 13.4-kilometer South-North tramway line along My Khe Beach, linking with the southeastern region of the city.

The two lines will require an estimated US$209 million and US$245 million, respectively.

Speaking at the meeting, vice chairman of Danang City Dang Viet Dung approved the plan in principle, and asked the municipal Department of Transport and relevant agencies to support the South Korean firm’s proposal.

 
GEMADEPT RESUMES CONSTRUCTION OF VIETNAM’S LARGEST DEEP WATER PORT
Thursday, 28 February 2019 02:30
After seven years of delay due to economic difficulties, Gemalink Cai Mep Deep Water Port, which is developed by Terminal Link Cai Mep Terminal JSC, a joint venture between Gemadept Corporation and France-based container shipping giant CMA CGM, was resumed.

On February 20, Gemadept Corporation organised the ground-breaking ceremony for Gemalink Cai Mep port, Vietnam’s largest deep water port.

Accordingly, the port has a total investment capital of $520 million with the first phase of $330 million. The port spans an area of 72 hectares and has an annual capacity of 2.4 million twenty-foot equivalent units (TEU) in order to receive the world’s largest ships.

Do Van Minh, the company’s chairman, said that as soon as the project completes its first phase, Gemalink would double the container loading capacity at Gemadept’s seaports and complete its service chain nationwide.

Previously, Gemadept and CMA CGM established a joint venture with the charter capital of $120 million to develop the project with Gemadept holding 75 per cent. Construction started in 2010, however, it had to halt two years later due to economic difficulties. 

In 2017, the corporation was restructured by selling shares in some member companies to prioritise restarting the project.

Founded in 1990, Gemadept was one of the first firms to be equitised and listed on the public market.

In the next few years, Gemadept has set out a list of ambitious goals for expansion in both Vietnam and overseas. Areas of focus include the development of Nam Dinh Vu port in the northern province of Haiphong.

Besides, Gemadept will continue expanding its port, logistics, warehouse, transportation, and air cargo services to create a complete 3PL logistics and port system.

Along with plans to develop new ports, in July 2018, Gemadept finalised the sale of its 51 per cent stake in the company to an undisclosed South Korean buyer. The transaction’s value was not disclosed, but it is estimated at over VND104 billion ($4.6 million).

 
ADVANTAGES OF DOWNSTREAM PORTS IN 2019
Tuesday, 19 February 2019 01:59

Large shipping lines have continuously increased their feeder size to cut costs on each container, which means a draught (the boat is submerged in water) and the overall length of the vessel is also increased. Therefore, downstream ports with deeper flows and larger turning basin will have a significant advantage over upstream ports.

 

The deep-water port cluster in Cai Mep - Thi Vai (Vung Tau) is expected to become an important container gate in the southern region. After a long time with low performance, in fact, container volume in 2017 in this area has tripled compared to 2011 and reached 2.4 million tons, accounting for about 20% of Vietnam's container volume. .

 

With the characteristics of a deep-water port cluster, this area has the advantage of being able to receive large vessels up to 200,000 DWT. In the trend of firms always want to use large size vessels to transport goods. Demand in this region will be positive in the next few years.

Besides, the US-China trade war can help Vietnam increase its ability to gain market share from China as a production center due to its relatively cheap labor force, stable political environment and major Open trade books.

 

 

Meanwhile, Vietnam's export value for goods that China has been taxed (wood, textiles and footwear) grew at a higher rate than every year. This trend may boost the demand for international shipping to Vietnam, thus increasing the amount of container throughput because these products are mainly transported by sea.

 

The Ministry of Transport has issued Circular 54/2018 / TT-BGTVT, thereby adjusting the price frame for a range of services at Vietnamese seaports, including container loading and unloading services. The circular will officially take effect in 2019. Accordingly, the new floor price will be 10% higher than the current floor price (equal to the market price due to oversupply) for the northern ports ( not including HICT in Lach Huyen).

 

This will help to increase the income of downstream ports in Hai Phong by breaking down the service price trend due to the tough competition in this area. In the South, the frame remains the same, except for the terminals in Cai Mep - Thi Vai (up 13% per TEU).

 

However, FDI inflows are slowing down. Too much reliance on FDI will put the economy at risk if the activities of FDI enterprises become stagnant. At the same time, the problem of oversupply in Hai Phong may lead to port operators not fully benefiting from the lifting of container handling rates.

 

In addition, delay dredging activities lead to unsecured channel depth, leading to a reduction in cargo throughput.

 
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