Increasing domestic box ship fleet could reduce costs for Vietnam’s shippers

Source: The Loadstar
Date: 3rd November 2022

The expansion of Vietnam’s container shipping fleet, and the incentives for that, could generate benefits for shippers through reduced transport costs.

Last month, the Vietnamese government approved plans to increase the number of containerships owned by domestic companies by exempting import taxes and halving tonnage fees on goods they carry.

The target is to double the ratio of imports and exports carried on Vietnamese ships to 10% by 2026, and double this again to 20% by 2030.

Currently, there are 37 in-service Vietnam-flagged containerships, ranging from 200 to 1,800 teu. The small scale of this fleet, say industry players, indicates it will be a mammoth task to build up the fleet.

Linerlytica analyst noted that Vietnamese container shipping companies were all small, regional players that operate only within Asia.

He explained, “They operate mostly older and smaller ships than their foreign rivals and don’t enjoy any cost or network advantages.

“Several Vietnamese owners have placed orders for new ships in the past two years, but they are small feeder units of 1,800 teu only. And I’m not sure the authorities are able to discriminate against foreign carriers on import taxes, so I’m not sure how this will translate to an advantage for domestic carriers.”

A reliable source told The Loadstar: “As a forwarder, it is unlikely to change the market dynamics and bring any specific benefit to us. However, if it assists local industry with more capacity and competitive costs to move product to export customers, and reduce import costs for productive local industries, this is a positive benefit.

“Actual imports loading on these vessels for intra-Asia, for example in the ports of Singapore, Hong Kong and Malaysia, may be exempt from import taxes if carried by domestic ships, and have tonnage fees halved.”

Within Southeast Asia, shippers had alternatives to sea freight, like trucking and rail. There is a scheduled road service connecting Vietnam to the rest of Southeast Asia.

He said: “The ability for our customers to use multimodal to increase their supply chain resiliency, while balancing cost and lead time, has made a difference to the services we offer. We hope the enhancement the Vietnamese government is putting across to improve trade flows will increase the economic growth in the country, as well as the region.”

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