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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.

 
9,600-TEU APL SHIP ON FIRE EN ROUTE FROM SHENZHEN TO SINGAPORE
Thursday, 14 February 2019 02:22

THE Singapore-flagged 9,600-TEU APL Vancouver has been hit by fire on its on cargo deck as the ship was en route from Shenzhen to Singapore and had to head into to Vietnamese waters.

It sailed into obscure Vung Ro Bay in Phu Yen Province, where the Vietnamese Coast Guard organised fire fighting operations. It is understood that a salvage company has already been contracted.

Now a unit of French shipping giant CMA CGM, APL, the operator of the ship, reported that fire broke out in one of the cargo holds about 4.30am January 31, whereupon emergency response procedures were activated by the crew.

All 24 crewmen were reportedly in good health, and no pollution has been reported.

The International Union of Marine Insurance (IUMI) has warned that the design and fire fighting arrangements of modern container ships can make cargo fires difficult to address, noted Fort Lauderdale's Maritime Executive.

"Once established, a fire can be virtually impossible to get under control," asserted Nick Haslam, group director of shipping services for LOC, in a recent post for IUMI.

"This is because of a combination of factors; restricted access to the cargo stow where many of the fires have started and the sheer size and scale of an ultra large container vessel (ULCV), together with inadequate crew training and equipment."

 
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