The Viet Nam National Shipping Corporation (Vinalines) recorded a loss of VND660 billion (US$32 million) in the first half of this year, the first time ever in its 15 years of operation, said General Director Nguyen Canh Viet, VNS reports.
Viet said that his corporation had lost revenue despite the fact that its three core services - marine transport, ports and logistics - had experienced an increased revenue of 5 per cent to $492 million in Q1.
Trade experts attributed the losses to the sharp decrease in freight rates, high fuel and interest rates, fluctuation of exchange rates and inadequacies in the mass development of vessel fleets at the same time. As a result, Vinalines' loss was inevitable, they said.
Vinalines holds 70 per cent of tonnage of the nation's vessel fleet. In 2009, the marine transport market got the lowest rates within 20 years, but Vinalines still generated a profit of VND300 billion ($14.5 million).
Of the VND660 billion in losses, Vinalines' business accounted for VND507 billion, and five businesses transferred from the Viet Nam National Shipbuilding Industry Group (Vinashin) suffered a loss of VND153 billion.
The highly anticipated joint ventures between Vinalines, Sai Gon Port and foreign partners, including newly-operational SP-PSA International Port Co Ltd and Cai Mep International Port Co Ltd (CMIT), also reported a loss of VND400 billion ($19.4 million).
SP-PSA International Port Co Ltd attributed the loss to low container service charges at the Cai Mep-Thi Vai, which were not managed effectively by authorities of the ports.
Vinalines, as well as many major carriers around the world, was victim of an investment bubble on fleet development based on a virtual index of demand and freight charges over the last five years, said Bui Quoc Anh, Deputy General Director of Vinalines.
The pressure on shipping companies was great, due to the lending interest rate of 21-22 per cent a year. The interest payment is high for an investment of between VND30 to 40 billion ($1.5-1.9 million) on a 20,000DWT vessel, and did not even include the lease term of partners' vessels below the production prices, said Tran Thien, Director of the Bien Dong Marine Transport Company.
To help Vinalines resist and overcome the difficulties, Viet said the Government had allowed the company to increase its charter capital from VND8 trillion ($388 million) to VND12 trillion ($582 million) and had asked the Finance Ministry to up financial assistance from VND1 trillion to VND2 trillion ($48.5-97.1 million).
To minimise losses by late 2011, many marine transport enterprises have conducted solutions to raise their service quality and restructure their fleets.
However, these solutions depend greatly on the recovery of the local and foreign maritime transport markets. Vinalines has predicted that marine transport market in Q3 would fall sharply before recovering slightly in Q4 this year.
In such context of a dismal marine transport market, selling old vessels to restructure was very difficult. Furthermore, many businesses either did not have ships or continued suffering loss in the last 2 to 3 years thus forcing them to sell their fixed assets, Thien said.
Viet said that his corporation had lost revenue despite the fact that its three core services - marine transport, ports and logistics - had experienced an increased revenue of 5 per cent to $492 million in Q1.
Trade experts attributed the losses to the sharp decrease in freight rates, high fuel and interest rates, fluctuation of exchange rates and inadequacies in the mass development of vessel fleets at the same time. As a result, Vinalines' loss was inevitable, they said.
Vinalines holds 70 per cent of tonnage of the nation's vessel fleet. In 2009, the marine transport market got the lowest rates within 20 years, but Vinalines still generated a profit of VND300 billion ($14.5 million).
Of the VND660 billion in losses, Vinalines' business accounted for VND507 billion, and five businesses transferred from the Viet Nam National Shipbuilding Industry Group (Vinashin) suffered a loss of VND153 billion.
The highly anticipated joint ventures between Vinalines, Sai Gon Port and foreign partners, including newly-operational SP-PSA International Port Co Ltd and Cai Mep International Port Co Ltd (CMIT), also reported a loss of VND400 billion ($19.4 million).
SP-PSA International Port Co Ltd attributed the loss to low container service charges at the Cai Mep-Thi Vai, which were not managed effectively by authorities of the ports.
Vinalines, as well as many major carriers around the world, was victim of an investment bubble on fleet development based on a virtual index of demand and freight charges over the last five years, said Bui Quoc Anh, Deputy General Director of Vinalines.
The pressure on shipping companies was great, due to the lending interest rate of 21-22 per cent a year. The interest payment is high for an investment of between VND30 to 40 billion ($1.5-1.9 million) on a 20,000DWT vessel, and did not even include the lease term of partners' vessels below the production prices, said Tran Thien, Director of the Bien Dong Marine Transport Company.
To help Vinalines resist and overcome the difficulties, Viet said the Government had allowed the company to increase its charter capital from VND8 trillion ($388 million) to VND12 trillion ($582 million) and had asked the Finance Ministry to up financial assistance from VND1 trillion to VND2 trillion ($48.5-97.1 million).
To minimise losses by late 2011, many marine transport enterprises have conducted solutions to raise their service quality and restructure their fleets.
However, these solutions depend greatly on the recovery of the local and foreign maritime transport markets. Vinalines has predicted that marine transport market in Q3 would fall sharply before recovering slightly in Q4 this year.
In such context of a dismal marine transport market, selling old vessels to restructure was very difficult. Furthermore, many businesses either did not have ships or continued suffering loss in the last 2 to 3 years thus forcing them to sell their fixed assets, Thien said.