[Advantage Logistics] With learning from the disruptions caused due to Russian invasion of Ukraine, the Vietnam Logistics Business Association (VLA) has moved to acquire its own fleet to run businesses on Asian shipping routes to China, Korea, Japan, Malaysia, India, Singapore and the Middle East.
The association said it will need US$1.5 billion to build new ships, purchase old ones, and rent and buy containers for Vietnam’s container vessel fleet.
The move is taken after Vietnam Maritime Administration said the closure of services by major European shipping lines to and from Russia can create opportunities for Vietnamese ship owners to increase their market share in the days to come.
The association said over the next three to five years, it will focus on investing in the shipping sector which will be mobilized mainly from the private sector added by support measures from the government.
At the same time, the VLA sought cooperation from enterprises involved in mechanics, iron and steel, textiles, footwear, furniture, seafood and general food goods so that the cargo volume for the local fleet is ensured.
Additionally, the association sought government’s intervention to attract Vietnamese crew members to work on ships and provide them with required training and income tax exemption, alongside allowing foreign crew members to work on Vietnamese flagged ships.
The association will be using 1,800 TEU to 2,500 TEU vessels since this type of ship can directly dock at Hai Phong port due to its low draft, below 9.5 meters.
The services will need a total of 14 ships for the first year and in the second year, six additional vessels will be deployed on two routes to China and Japan. From the third year onwards, the association estimates that it will need to buy more Panamax ships of 4,000 TEU to 5,500 TEU capacity to run a combination of the North and South routes connecting Japan – Korea – China – Vietnam – Singapore (or Port Klang) – India – Middle East and vice versa.
VLA also plans to pursue a “rent-buy” method for the required containers in order to limit the investment capital that is needed.
Currently, Vietnam has 10 container shipping companies having 48 boxships with a total capacity of 39,519 TEU. The fleet includes 13 ships over 25 years old and three vessels over 20 years old, 15 ships have a tonnage from 300 TEU to 600 TEU, while only 14 vessels have tonnage from 1,000 TEU to 1,800 TEU and can run routes in Inner Asia.
In 2021 the Vietnamese ports handled 24 million TEU, which translates to an increase of 7% compared to the previous year. The Vietnamese shipping fleet’s vessels can carry only 7% of the total export-import of the country while the rest are borne by foreign shipping lines.
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