Sea port developers experiencing dark days

Sea port developers experiencing dark days

Foreign invested sea port developers have got bogged down in a competition of reducing loading and unloading fees to scramble for clients, thus facing the risks of incurring heavy losses.

The poor business performance of the Cai Mep Port (CMIT), SP-SSA Port (SSIT) and the Saigon Container International Port (SP-PSA) in the Cai Mep – Thi Vai area in Ba Ria – Vung Tau province has caused a big headache to the Vietnam National Shipping Lines (Vinalines).

The three ports are all the joint ventures between Vinalines with foreign partners, which have been invested heavily, capable to receive big tonnage ships of up to 100,000 DWT.

SP-PSA is the joint venture among Vinalines, the Saigon Port Company and Singaporean PSA International which has the chartered capital of 65 million dollars. CMIT is the joint venture between Vinalines and Danish APM Terminals which has the chartered capital of 268 million dollars.

Nguyen Canh Viet, General Director of Vinalines, said only some items have been put into operation so far, therefore, the joint venture has to allocate high depreciation, which accounts for a big proportion of the total expenses in the first years of operation of the ports.

The government’s inspectors have found out that in 2007-2010, Vinalines and its subsidiaries contributed 1807.82 billion dong to three joint ventures with foreign partners to exploit the ports in the Cai Mep – Thi Vai area, but the investments have not brought the desired effects.

By December 31, 2010, the total loss incurred by the three ports had reached 252 billion dong.

Meanwhile, according to Vinalines, by December 2011, SP-PSA and CMIT had incurred the loss of 460 billion dong.

In an effort to increase the attractiveness of the ports in the Cai Mep – Thi Vai area, in the last two years, the ships with the tonnage of over 50,000 DWT docking at the first international transit ports of Vietnam have been enjoying the 40 percent reduction in the maritime security charge, tonnage charge and 50 percent reduction in the pilotage fee in comparison with the levels stipulated in the Decision No. 98 by the Ministry of Finance.

Despite the preferential fees, the volume of goods going through the Cai Mep – Thi Vai group of ports was still lower than the ports’ capacity.

Since late March 2012, the number of international ships arriving and leaving the Cai Mep – Thi Vai area has dropped from 16 to 7 per week. This has forced port developers to join a competition of slashing fees in order to receive ships.

Currently, the container handling fee at the ports in the area is just 32 dollars per container on average, much lower than the floor level of 40 dollars per container.

“The stiff competition and the lower than expected attractiveness of the ports here both have made the investors, who spent hundreds of millions of dollars to build infrastructure items worried stiff,” said Nguyen Xuan Ky, Deputy General Director of CMIT.

Park Hoon, General Director of Hanjin Shipping Vietnam, has noted that the expenses ships have to pay when calling at the ports in Cai Mep – Thi Vai area prove to be less competitive than in other regional countries. The problem is that every time when big tonnage ships of 51,000 DWT (4500 TEU) dock at the ports, the ship owners can only “get” some hundreds of TEUs of goods due to the low volumes of exports and imports.

Analysts have pointed out that with the current low service fees, the new ports and modern ports, like SP-PSA and CMIT would incur loss for a long time of 12-13 years.

vietnamnet