Several Vietnamese port associations and companies, including the Vietnam Seaports Association (VPA), the Vietnam Ship Agents and Brokers Association (VISABA), and port operators such as Dinh Vu Investment and Development JSC, Cai Mep Port LLC, and Saigon Port JSC, have collectively submitted appeals to the Ministry of Transport (MOT) to reject the Vietnam Maritime Administration’s (VMA) proposal to reduce container handling fees by 30%.
Container handling fees already at “rock bottom”
Mr. Nhu Dinh Thien, General Secretary of VISABA, stated that “container handling fees in Vietnam, especially for our import and export goods, are currently 2-3 times lower than in other countries in the region. Therefore, reducing container handling fees by 30% will create significant difficulties for port businesses”.
Echoing this sentiment, a representative of the VPA said, “Currently, Circular 54/2018/TT-BGTVT issued by the MOT regulates the floor price for container handling services at an excessively low level, with costs only about half the average of other countries in the region. (The average price for domestic transport is only 1/3 of the aforementioned foreign price), this is depleting the development potential of seaport enterprises”.
In an interview with VietnamFinance, Mr. Trieu The Thuan, Deputy General Director of Dinh Vu Investment and Development JSC, said, “In Hai Phong (Region I), the floor price for container handling services is currently the lowest in the country.
For example, the floor price for foreign containers is 33 USD/20′ container (only 80% compared to Region III). Meanwhile, the floor price for domestic containers is 260,000 VND/20′ container (only 33% of the floor price for foreign containers). Thus, a 30% reduction will greatly affect port revenue”.
According to Mr. Nguyen Quoc Hung, Deputy General Director of Saigon Port JSC, “the current floor price for domestic containers in Ho Chi Minh City is very low (260,000 VND/20′ container), only 27% of the floor price for foreign containers in the same region, which is 41 USD/20′ container. Therefore, any further reduction will only benefit foreign shipping lines”.
Foreign shipowners benefit
The VPA stated, “Currently, if ports reduce prices, shipowners will directly benefit. Specifically, shipowners are currently collecting from import-export cargo owners through THC (Terminal Handling Charge). Shipowners are currently collecting over 90 USD/20′ container from cargo owners while only paying 52 USD/20′ container to the port at Cai Mep. In the Hai Phong area, shipowners only pay 20 USD/20′ container. Thus, the discrepancy is up to 40 USD/20′ container, with over 10 million TEUs of containers passing through seaports each year.”
“This shows a ‘discrepancy’ of hundreds of millions of USD per year, which foreign shipping lines have successfully maintained for many years through the mechanism of managing seaport service prices in Vietnam. Therefore, a further 30% reduction in service prices will cause more unreasonable and severe damage to the port business sector,” a VPA representative analyzed.
The VPA representative also said, “Another reality is that shipowners are currently also major shareholders investing in deep-water ports such as Lach Huyen and Cai Mep, with a throughput accounting for 70% of the country’s container cargo market share. These joint ventures and shareholders will have a competitive advantage and increase their market dominance in the long term if they can ‘force’ service prices as low as possible to weaken other competing ports that do not have the same capital resources as Vietnamese seaport enterprises and joint venture ports without capital from these shipping lines.”
The VPA also warned, “Currently, Vietnam’s container shipping services are dominated by foreign shipping lines, which hold up to 95% of the market share. The pressure on prices and fees from foreign shipping lines is the trend of dominating the competitive seaport service market, which has been and is differentiating the strategic development of Vietnam’s marine economy under the current management mechanism. Therefore, we propose not to reduce the loading and unloading service price by 30%, and at the same time, to raise seaport service prices to the same level as other countries in the region”.
Source: https://vietnamfinance.vn/