Vietnamese shipping lines are entering the international market

VCN - Vietnamese shipping lines are actively implementing many plans such as joint ventures with foreign shipping lines, investing in upgrading their fleets to go to the international market with the desire to help Vietnamese import and export enterprises reduce dependence on foreign shipping lines, thereby increasing the efficiency of Vietnam's import-export activities, and better exploiting signed FTAs.
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Vietnamese shipping lines are entering the international market
ZIM-Hai An joint venture will be a chance for Hai An shipping company to expand into the international market.

By the end of 2021, Vietnam had 10 companies involved in the business and operation of container ships, including 45 ships, with a capacity from 240 TEU to 1,794 TEU. Most were old ships (accounting for 73%), from 15-20 years old, many over 20 years old, which are about to be discontinued.

Meanwhile, most Vietnamese container shipping companies are small in scale, do not have strong financial potential, and the exploitation efficiency on domestic routes was not high, so very few companies have investment and renovation plans, development of the fleet, investment in container shells, equipment as well as training, building a team of officers, specialists and crew members capable of absorbing technology and techniques.

In addition, the connectivity of Vietnamese shipping companies with international networks is also very limited. This will cause obstacles when Vietnamese shipping enterprises want to expand service routes to regional and international markets.

Hai An discussed with ZIM Integrated Shipping Services Ltd., Co. to establish ZIM - Hai An container shipping joint venture company in order to invest in container ships and shells, absorb technology and take advantage of the partner's network to invest in developing Vietnam's container fleet. Along with that, open container shipping routes to China, Northeast Asia and Southeast Asia, gradually expand to South Asia, the Middle East, Australia, America and Europe in the future, serving direct import-export activities of Vietnam. According to Hai An, ZIM is the 10th largest container shipping company in the world, currently operating more than 100 container ships with a total tonnage of nearly 438,000 TEUs, with experience in many container routes around the world.

With that fact, in the coming years, when many ships are out of operation and enterprises do not invest in buying and building new ones, Vietnam's sea container transport capacity will continue to decline sharply, being unlikely to meet domestic demand and will not ensure socio-economic development.

This will continue to limit opportunities for regional and international expansion, making Vietnamese import-export enterprises dependent on foreign shipping lines, and not able to participate in stabilizing international container freight rates as directed by the Government, ministries and branches.

Currently, Vietnam's import-export goods are transported mainly by sea containers, of which about 25% to the Americas, about 15% to Europe, about 50% to China and Northeast Asia, and about 50% to Southeast Asia and about 10% to Asia - India.

The number of goods continues to grow well, and have achieved double-digit growth in some areas in recent years such as Cai Mep, Hai Phong. In which, over 95% of goods are being transported by international shipping lines because Vietnam does not have a suitable and large enough container fleet.

In particular, due to the impact of the Covid-19 pandemic, the broken and interrupted global supply chain has greatly affected the international sea container transport market, so in 2021, the freight rate has increased many times. Some routes increased from less than US$2,000 per container to over US$20,000 per container, but Vietnamese enterprises still cannot have enough space on ships and even container shells for transportation.

This negatively affects the import-export activities of enterprises as well as the development of the economy, reducing the effectiveness of FTAs that Vietnam has signed with international partners in recent years.

Going to the international market

To make up for the shortage of transport capacity, improving the sea transport capacity of the Vietnamese fleet, expanding the shipping service route of the Vietnamese container fleet, connecting Vietnam with other countries in the region are the desire of many Vietnamese shipping companies.

Recently, Hai An Shipping Joint Stock Company has announced the document of the General Meeting of Shareholders in 2022, including a submission on the establishment and business operation plan of the ZIM - Haian Container Transport Joint Venture Company.

According to the submission, after being approved, the company will open two container shipping routes: Vietnam - Southeast Asia and Vietnam - China. With the operation of these two transport routes, import-export goods of Vietnamese enterprises will be transported directly to the markets of Malaysia and China with a commitment of space on ships and container shells. In addition, from these transshipment centers, Vietnam's import-export goods can connect to other international routes of ZIM Lines to South Asia, the Middle East, the Mediterranean, Australia and the US quickly and conveniently.

In addition to inheriting the international network and management experience of ZIM Lines, the joint venture is also committed to financial support from ZIM Lines to continue purchasing and building new container ships with suitable tonnage for the development of new routes.

With the same strategic vision, many plans to upgrade the fleet and go to the international market are also promoted by Vietnamese shipping companies.

For example, Vietnam Ocean Shipping Joint Stock Company (VOSCO) is actively selling its old and inefficient ships, and actively looking for and outsourcing ships to increase its shipping capacity, output, revenue and performance.

Currently, VOSCO's fleet has 11 ships, including seven dry cargo ships, two oil tankers and two container ships. In addition, VOSCO also has a fixed-term charter for a number of ships, so the company can exploit about 12-14 ships. The company is planning to bring more ships to exploit in high demand markets such as Japan, Europe and Australia.

At the beginning of 2021, Hoa Phat Group also began to step into the shipping industry by completing the purchase and receipt of two large cargo ships with a tonnage of 90,000 tons to meet the demand of domestic transportation and receive commercial orders outside the market. By the end of 2021, Hoa Phat continued to buy another kamsarmax kind of ship with a tonnage of more than 80,000 tons, increasing the company's fleet to three ships. Currently, this ship is carrying out a cargo journey for a partner outside Hoa Phat Group.

In the field of liquid cargo transportation, in 2021, Gas Shipping received the Shamrock Jupiter at the port of Santos in Brazil. The Shamrock Jupiter ship has a tonnage of 19,387 DWT with many modern features, meeting the strict standards of the maritime industry and major customers in the world.

Accordingly, the ship has been put into operation in the American market. Currently, Gas Shipping's fleet includes seven ships, with a total tonnage of over 37,000 DWT, mainly operating Southeast Asia - South China and domestic routes.

At the end of 2021, PVTrans also received an additional oil and chemical tanker PVT Oriana with a tonnage of 13,056 DWT built in Korea and put into operation on international routes. Currently, PVTrans' fleet consists of 36 ships, of which about 80% are operating in the Middle East and Asia - Pacific regions and have participated in high-standard markets such as Europe and North America.

By Nguyen Hien/ Binh Minh

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