Shipbuilding industry’s golden era over, oversupply predicted
The Vietnam shipbuilding industry has been developing in 10-year cycles with pinnacles in 1987, 1997, 2007 and 2017. As the highest peak of the latest cycle is over, an oversupply may occur in 2018.
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According to Le Quang Trung, deputy CEO of Vinalines, the nation’s leading shipping firm, the total volume of goods shipped by sea in 2017 reached 160,000 tons, an increase of 7 percent over 2016. The firm owns 90 ships and deep-water seaport and logistics systems serving maritime transport.
“Vinalines is a medium corporation in the region,” he said. “In 2017, it undertook 20 percent of the nation’s total transportation output. Vietnam’s maritime industry in general and Vinalines’ business still have big development opportunities.”
The company, which plans to have an IPO in 2018, is seeking strategic investors who will hold a 35 percent stake. The investors could be domestic partners or companies from Singapore to attend APM 2018.
Pham Hai Bang from the Vietnam Register (VR) cited figures to prove that the industry last year witnessed growth rates of 2-5 percent for bulk, liquid and container cargo transport.
However, Bang said that Vietnam shipping industry’s development peak came in 2017, and the new cycle, commencing from 2018, may begin with an oversupply.
Vietnam has a high number of shipbuilders, including military and privately run firms. Since 2016, Vietnam has opened the coastal transportation route to share work with road transport. It is estimated that more than 1,500 ships, including very large ones, have joined the route. The rapid growth in the last year is expected to slow down this year.
Vietnam’s shipping firms have been warned of big difficulties ahead because of the tightened international regulations on sea environmental protection.
From 2020, the sulfur content in fuel oil used for ships will be 0.5 percent. This is a high requirement, which will lead to higher fuel costs and maintenance, management and operation costs as well.
Meanwhile, Nguyen Tat Hoan, deputy CEO of PetroVietnam Exploitation Production Corporation (PVEP POC), does not think Vietnam’s maritime industry experienced a good year. He said the industry’s ‘vital force’ was weaker last year and 2-5 percent growth rates were ‘insignificant’.
He said that Vietnamese shipping firms have missed out on a potential market - Vietnam. “The high demand of the home market still has not been fully exploited,” he said.
