Tuesday, January 08, 2008

go challenCargo challenge: Many obstacles for Vietnam's shipping industry

Container ships await loading at Saigon Port in Ho Chi Minh City
The size and age of the fleet and the capacity of the nation's ports are causing problems for the nation's merchant navy.

Vietnam's sea cargo industry is facing a series of challenges ranging from outdated ships to inadequate ports.

Ship issues

Vietnam's cargo ships are yet to call into the most desirable destinations in sea cargo transport - American ports, said Tran Duc Du, Head of the Oil Tanker Department of the East Sea Transport Company.

“Ships carrying cargo to American ports can count on high fees and new cargo for their return trips,” Du said.

However, at present Vietnamese exports to the US are mostly carried by foreign ships, with Vietnamese vessels acting mainly as “agents.”

Most Vietnamese ships only ply part of the route, unloading their cargo in Hong Kong for foreign ships to pick up and deliver to American ports, according to Du.

One of the major problems for Vietnam's cargo fleet, industry experts say, is the small size of the ships.

It's unprofitable to ship low volumes of cargo over long distances because the ship-ping fees won't be high enough to offset the cost of fuel, insurance and labor.

The age of most Vietnamese ships is another problem for the nation's merchant navy, said Nguyen Vu Hai, head of the Sea-Going Ship Department in the Vietnam Register, the office that checks and certifies ships and cars.

“The average age is 14.5 years old, which puts most cargo owners off,” said Hai.

One hundred and fifty of the 432 sea-going ships sailing on international routes have been in use for more than 30 years, Ha added.

The fleet is aging for two reasons.

Firstly, Vietnamese ship owners can't afford new ships and, secondly, Vietnamese ship builders are not yet able to produce models that comply with the increasingly stringent international standards on safety and environment protection.

Many vessels in Vietnam's existing cargo fleet also have problems meeting the international standards for security, safety and environment protection.

They end up being detained at foreign ports for breaching the standards.

In the first eight months of last year 24 Vietnamese ships were detained at foreign ports, putting Vietnam at number 7 on the list of countries with ships held at foreign ports.

Port problems

The double-handling of Vietnamese cargo is at intermediate ports such as Hong Kong and Singapore because Vietnam lacks deepwater ports that will allow larger vessels to dock.

About 80 percent of Vietnam's exports and imports are transported by sea.

Cai Lan, the first deepwater port in northern Vietnam, for instance, can only receive container ships of up to 5,000 TEU (twenty-foot equivalent unit) while more and more cargo ship companies are using 15,000 TEU ships for long-distance carriage.

And only nine of the country's 266 seaports can be upgraded to handle 50,000 DWT (dead weight ton) cargo ships or 3,000 TEU container ships.

However, Deputy Head of the Vietnam Maritime Administration Nguyen Ngoc Hue said within three to five years, Vietnam's sea transport industry will advance rapidly with the development of maritime, shipbuilding and seaport industries.

Hue said many domestic sea transport companies had signed contracts to buy big container ships and oil tankers from abroad.

Domestic shipbuilding factories will also be delivering on contracts for ships of 54,000 to 58,000 DWT within a few years, he said.

And by 2010, a series of new deepwater seaport projects will be completed.

These include Van Phong in Khanh Hoa Province, Hiep Phuoc in HCMC and Thi Vai-Cai Mep in Ba Ria-Vung Tau.

However, experts say sea trans-port infrastructure development is unlikely to keep pace with the rapid growth in sea trade.

Last year, for instance, more than 60,000 ships with 154 million tons of cargo called into to Vietnam's seaports, double the figure six years ago.

So even with the new ports and upgrades, the country will only be able to cope with 80 percent of demand, which is estimated to increase to more than 265 million tons by 2010 and 480 million tons by 2020.