Fee reductions offer little benefit to maritime firms
Fee reductions offer little benefit to maritime firms
The Vietnam Maritime Administration (VMA) has sent a report to the Ministry of Transport (MoT), assessing the possible impact of reduced fees on Vietnamese maritime firms amid mounting fuel prices.
The report asserted that adjustments in fees for international transport would have a negligible impact on Vietnamese firms since freight transport between Vietnamese ports and international ports is undertaken predominately by foreign shipping lines.
Additionally, maritime fees account for just 7-9 per cent of total costs incurred by a vessel engaging in international transport and 3-5 per cent in domestic transportation. That means fees reduction is not much of a solution to the problem of mounting petrol bills.
“Fuel costs, wages and insurance premiums take up the lion's share in maritime firms’ total costs. Accordingly, fees reduction would only improve their costs marginally, not enough to offset the rise in fuel prices,” the report said.
The Port Authority shows that Vietnamese ports collected VND16.9 billion (US$727,000) of fees from domestic transport in 2021. On average, every vessel paid around VND37,000 each time it entered and left a port.
Such an amount is so meagre that even if VMA removes the fees, it will make no big difference to maritime firms' total costs. The fees are not supposed to be reduced or removed to offset fuel costs because of their nature.
"The fees are the amounts of money firms have to pay for the public services provided by State agencies. Undoubtedly, it is against their nature to reduce or remove the fees to cover other irrelevant costs," the report added.
During the pandemic, VMA advised MoT to issue the Circular 74 to reduce fees applicable to maritime firms to lift them out of financial hardship. The circular was much appreciated by the firms at the time.
As fuel prices have been increasing steadily recently, Deputy Minister of Transport Le Dinh Tho has asked VMA to consider reducing maritime fees again to help firms cover higher fuel costs.
This time, VMA believed that the policy will not do much good for firms as it did in the past.
