Loosening the belt buckle for sustainable development of the maritime industry

Mr. Pham Quoc Long, Vice Chairman of the Vietnam Shipowners' Association

Circular 39/2023/TT-BGTVT of the Ministry of Transport issued the framework tariff for pepper services, bridge, wharf, buoy, container loading and unloading services, and towing services at Vietnamese seaports has just taken effect. How do you assess the impact of this Circular on the maritime industry?

In recent times, the Ministry of Transport and the Maritime Administration have accompanied enterprises in the industry to solve difficulties and have achieved certain successes. This was evidenced by the issuance of Circular 39/2023/TT-BGTVT dated December 25, 2023, which issued the framework tariff for pepper services, bridge, wharf, buoy, container loading and unloading services, and towing services at Vietnamese seaports after five years of thorough research, taking opinions from all relevant parties. Circular 39 took effect from February 15, 2024, helping to increase the floor price for container loading and unloading services at seaports by an average of 10% compared to Circular 54/2018/TT-BGTVT previously. This has increased income for ports to participate in green and digital transformations in the future.

However, right after Circular 39 was issued, foreign shipping companies continuously and uniformly announced an increase of 10-20% in terminal handling charges (THC) for each type of container service 15 days before the application without going through inspection, explanation of fee components, surcharges, or any constraints by authorities, with the absolute increase value being more than three times the adjusted price for loading and unloading services in Circular 39. This has posed a significant challenge to Vietnam in managing foreign shipping lines and protecting the legitimate interests of domestic import-export enterprises, seaports, and logistics companies.

How does the simultaneous and significant increase in terminal handling charges by many international shipping lines affect import-export enterprises, sir?

Since the beginning of 2024, foreign shipping lines have continuously announced an increase of 10-20% in THC for each type of container service. According to international practice, THC fees will be used 80% to pay for loading and unloading services for ports, but in Vietnam, only about 40% can be paid. Surcharges are the revenue source for shipping lines, sometimes even the main source because some competitive routes and many shipping lines are willing to offer zero or even negative freight rates and then consider surcharges as the main source of revenue. Therefore, when Circular 39 was passed with an adjustment of about 10%, shipping lines also increased surcharges, by about three times compared to the adjusted loading and unloading price, causing significant losses to shippers.

With the sharp increase in freight and surcharges, when shipping lines enter Vietnam, if they do not explain the fee components and surcharges, authorities find it difficult to check the rationality of surcharges. This is why, when surcharges increase, shipping lines benefit greatly, while losses are borne by ports and import-export enterprises. While foreign shipping lines are mainly FDI enterprises, revenue from freight rates and price-related surcharges is transferred to the parent company abroad. It is worth noting that the surcharge increase by shipowners applies only to Vietnam, while other countries in the region have not taken any action to increase THC.

Immediately after receiving feedback from associations, the Vietnam Maritime Administration held dialogues with enterprises and shipping lines to find solutions to stabilize surcharges, fees, and THC, believing that there will be timely adjustments in the future.

In addition to tightly controlling the increase in surcharges by foreign shipping lines, what are the core issues that need to be addressed for the sustainable development of the maritime industry?

Developing the maritime industry is the green solution that Vietnam needs to aim for to keep pace with global trends. Therefore, we propose that the Ministry of Transport continue to strengthen dredging and regular maintenance of key national waterways such as in the Haiphong and Cai Mep - Thi Vai areas. For the Hai Phong route, it is necessary to ensure the maintenance of the Ha Nam Channel depth at -8.5 meters, while also studying the expansion of the channel to 120 meters according to Decision 886 dated July 24, 2023, by the Prime Minister, to facilitate two-way traffic, creating attraction for the Hai Phong port cluster, and reducing national logistics costs. This is a top priority task because the volume of goods passing through the Hai Phong port area has increased significantly over the years, currently accounting for 33% of the national cargo volume, but the channel is only 80 meters wide and allows one-way traffic, causing large waiting times for large vessels.

Along with this, additional planning and investment in the inland waterway port system, dry ports, ICDs, and Depots in key economic areas of the Mekong Delta and Southeast region to collect goods from industrial zones, enhance connectivity of goods to/from seaports, especially the Cai Mep - Thi Vai deep-water port cluster in the region.

For container ships and specialized vessels domestically that have not mastered shipbuilding technology, allowing the age limit  of imported ships to be increased from 15 years according to Decree 171/2016/ND-CP to 17 years to facilitate domestic enterprises to develop their shipping fleets, in line with Vietnam's maritime fleet development plan.

Additionally, ministries and sectors need to create favorable conditions, policies to encourage enterprises in the industry to actively access "green capital" to serve the development needs of national and regional maritime and river fleets.

Thank you, sir!