The jury is out on whether local ships are in a position to regain container transport market share from foreign players.
In a bid to boost local ships’ transport capacity, in late June 2012 the Ministry of Transport (MoT) enacted Document 5063/BGTVT-VT to temporarily halt foreign ship operations in local container transport market segment.
Some 20 foreign ships affected with a total carrying capacity of 500,000 dead weight tonnage (DWT).
Accordingly, from January 1, 2013 extending deadline or granting new licences to foreign ships transporting containers on local routes will temporarily stop.
“Local ships having priority over foreign ships when operating in the domestic market comes on par with the Maritime Law as well as Vietnam’s undertakings with the World Trade Organization relevant to member countries’ transport right protection,” said Vinamarine deputy head Bui Thien Thu.
This will be a great opportunity for local ship fleet to regain container transport market share in the home market which generates an estimated value of VND1,000 billion ($47.6 million) annually from foreign ships.
The move will cure local shipping firms’ current critical situation. For instance, in 2012’s first half 2,200 labourers at Vinalines were idle.
“That is a good opportunity for local ship owners to demonstrate their capacity towards goods consigners in the context of no pressures from foreign players,” said a local shipping firm director.
Vinamarine was trusted by the MoT to team up with Vinalines, Vietnam Shipowners Association and local shipowners to work on a comprehensive plan to ensure ship effective performance, avoiding commodities getting stuck at seaports.
These concerns were rooted on the fact that a year ago MoT’s similar move failed when the local ship fleet could not effectively handle its task of transporting containers on local routes.
Vinamaritime figures show that there are just more than 30 container ships out of 1,700 local ships currently operating in the domestic market meeting 30 per cent of the transport demand. That was why after 10 days of implementation the MoT had to issue additional licences allowing foreign ships to continue their business on local routes.
Besides, the quality of local ship fleet is admittedly far below that of foreign ships, particularly container ships of international forwarders such as Maersk or NYK Lines.
“Besides to higher shipping rates and low exploitation capacity local ships usually drop goods delivery terms,” said Vinamarine’s Thu.
Vietnam Shipowners Association general secretary Phan Thong worried local ship owners getting priority in transporting containers on local routes might give birth to a monopoly status and did not encourage firms to raise service quality, thus affecting goods consigners’ interests.