Vietnam’s cargo shipping paradox

Source: Vietnam net

According to latest statistics, Vietnam’s export and import revenues reach $52 billion and $61 billion a year. The Ministry of Transport also anticipated that the total volume of goods at Vietnamese seaports will be 498-590 million tones by 2015 and from 870 to 1,083 million tones by 2020, 1580 to 2100 million tones by 2030.

Vietnam has sea, ports, sources of goods and a strong shipbuilding industry but up to 80 percent of its import-export volume is shipped by foreign vessels, why?

Tran Duc Minh, Chairman of the Vietnam Shippers’ Council, analysed that traders don’t choose Vietnam’s cargo ships because the crew is small, with poor good maintenance conditions and less competitive prices. While foreign shipping companies have six trips to the US, Vietnamese shipping firms have only one because they can’t gather sufficient cargo for a trip resulted in high shipping fees.

Ngo Khac Le from a cargo shipping firm named Vietfranch said that Vietnamese cargo shipping companies sometimes don’t dare to take orders to transport goods of several hundreds of tones upwards because they couldn’t meet strict requirements on time, deposit and technical conditions. In theory, shipping firms can cooperate to carry out big contracts but Vietnamese firms don’t work that way.

Khuat Van Liem from the Maritime Agency said that Vietnam’s cargo shipping doesn’t develop because the country doesn’t have big ports and big vessels. To transport goods far, big ships are needed. But big ships need big ports.

However, Liem also said that even if Vietnam has these things, its shipping firms have to fiercely compete with foreign shipping companies.

Tran Duc Minh said that Vietnamese shippers should define to develop their crew to not only serve the domestic but also international markets. Many countries that don’t have big quantity of import-export goods but they have big crew of cargo ships like Nigeria and Greece because they exploit foreign markets.

Experts said that Vietnamese shipping firms should focus on sources of cargo in the region, not only in Vietnam. For shipping firms in the north, the biggest source of goods is China’s southwestern region. Goods from this region, if being transported via Vietnam’s Hai Phong port, can cut transport fees by 50 percent, compared with being transported via Guangdong.

In the central region, the trans-Asian road will be the shortest way for goods from Laos, Thailand’s northeastern region and part of Myanmar to Vietnam’s central ports to go to the world. This is the way for a market of 60 million people. Southern ports are the gateway for goods from Cambodia, Thailand and Malaysia to the world.

How to turn Vietnam into a sea power?

Ho Kim Lan, Secretary General of the Vietnam Seaport Association: The maritime sector has three important fields: ports, transportation and services. Vietnam can’t choose cargo shipping as the key to develop its sea economy because foreign shipping firms control over 80 percent of the market. Seaports would be the best choice.

According to Lan, the biggest difficulty for developing seaports in Vietnam is the slow development of transport facilities connected to seaports. Vietnam doesn’t make its seaport development plan based on the growth of the regional cargo market. In addition, there is a big gap between plans and the implementation of these plans.

He suggested implementing the mechanism called “port authorities”. Accordingly, the state will invest in port facilities and the private sector will operate ports. Port authorities will be set up with representatives of local and central state agencies and private investors. The port authorities will be responsible to design and implement port development plans and compete with big foreign ports.

According to Lan, Vietnam needs to develop international transit ports to compete with Hong Kong and Singapore and learn Hong Kong and Singapore’s experience in developing free trade and non-tarrif zones to attract foreign goods to Vietnamese ports. This model is applied at Vung Ang and Ky Ha ports already but it is not effective as expectation because Vietnam still lacks legal corridor for this model. Lan suggested to use this model at the Van Phong port in the future.

Dr. Nguyen Ngoc Hue, vice chief of the Vietnam Maritime Agency, had the same idea with Lan in promoting seaport development as the key to develop the sea economy.

He said that Vietnam is in the world most dynamic maritime area. There are many world leading container ports around Vietnam. Ba Ria-Vung Tau, Hai Phong and Van Phong have potentials to become major ports of the world.

He also agreed that to develop seaports, cooperation between the state and the private sector is crucial. After having modern ports, Vietnam needs a good management mechanism for ports and set up the so-called “port authorities” like other countries. However, this task needs to be carried out in a strict roadmap.