In response to the disruptions caused by Russia’s invasion of Ukraine, Vietnam Logistics Business Association (VLA) has acquired a fleet to operate its businesses on Asian shipping routes to China, Korea, Japan, Malaysia, India, Singapore and the Middle East.
In total, the association plans to spend USD 1.5 billion on building new ships, purchasing old ships, and renting and buying containers for Vietnam’s container vessel fleet.
Vietnamese ship owners can gain market share in the near future to increase their market share following the closure of services by major European shipping lines to and from Russia.
Over the next three to five years, the organization said it will focus on investing in the shipping industry, where funds will be mobilized from the private sector and government support.
Meanwhile, the VLA is seeking to obtain the cooperation of businesses engaged in mechanics, iron and steel, textiles, footwear, furniture, seafood and general food goods so that the local fleet is assured of a sufficient cargo volume.
Further, the association called for government intervention to recruit Vietnamese crew members to work on ships and offer them the training and income tax exemptions they need, along with the ability to hire foreign crew members on Vietnamese flagged ships.
Due to Hai Phong’s low draft, vessels with a capacity of 1,800 TEU to 2,500 TEU can dock at Hai Phong directly due to their low draft of fewer than 9.5 metres.
Six additional ships will be deployed on two routes to China and Japan in the second year, for a total of 14 vessels.
The association estimates that by the third year, it would need to purchase further Panamax ships of between 4,000 and 5,500 TEU capacity to run a combination of the North and South routes that connect Japan, Korea, China, Vietnam, and Singapore, India, and the Middle East.
Moreover, VLA is looking at a “rent-buy” method in order to minimize the amount of investment needed.
At present, there are 10 container shipping companies in Vietnam with 48 ships with a total capacity of 39,519 TEUs. 13 of the ships are older than 25 years and three are over 20 years old. 15 of the vessels have a tonnage between 300 and 600 TEU, while only 14 vessels have a tonnage between 1,000 TEU and 1,800 TEU and are capable of running routes in Inner Asia.
As of 2021, Vietnam handled 24 million TEUs, an increase of 7% since last year. Most Vietnamese exports and imports are carried by foreign shipping lines, while only 7% are carried by Vietnamese vessels.
