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Technical Report No. 8 PORT AND SHIPPING

Technical Report No. 8 PORT AND SHIPPING

Technical Report No. 8 PORT AND SHIPPING

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I-3-24<br />

Vietnam National Transport Strategy Study (VITRANSS)<br />

<strong>Technical</strong> <strong>Report</strong> <strong>No</strong>. 8<br />

Shipping and Ports<br />

55 days from the operation of their 20 vessels. This is mainly due to the waiting<br />

time for high tide and their turn for cargo operation.<br />

The VICT in Saigon, which offers a more efficient container operation, is<br />

regularly serving four feeder service companies only, all of which are its<br />

investment partners. Given the legal restrictions to container haulage operation in<br />

the urban area, other shipping lines do not utilize this more efficient port for cargo<br />

operation despite its proximity to the Saigon city zone.<br />

Management Efficiency<br />

One state-owned shipping company, the FALCON, specializes in the transport of<br />

liquid cargoes such as crude oil and other oil products. In 1998, this company<br />

has acquired a large oil tanker built in 1986 with a capacity of 60,600 DWT,<br />

aiming to transport 60,000 tons of crude oil from Vietnam to Japan. However,<br />

due to a depression in the market price of crude oil, the Japanese contractor<br />

insisted on an increase in capacity to 80,000 tons. FALCON lost its original<br />

consignment and had to seek for another contract.<br />

Specialized cargo vessels, such as oil tankers and bulk carriers, are used to carry<br />

out serve a long-term contract between cargo supplier/shipper and trader/buyer.<br />

Generally in this case, basic trade terms, such as freight on board (FOB) term and<br />

a nomination right to shipping line, are fully handled by the trader/buyer. Since<br />

there are only occasional offers for chartering vessels to transport specific<br />

consignments, it would be cost-effective to first conduct a study on the feasibility of<br />

investing on this operation prior to the acquisition of vessels. It may be more<br />

appropriate to charter vessels given the present unstable conditions in the market.<br />

Financial Viability<br />

Investments in shipping fleet expansion by state-owned companies under<br />

VINALINES are shouldered by each company without government subsidy.<br />

Shipping companies usually apply for bank loans from the Investment<br />

Development Bank.<br />

Although VINALINES is authorized to administer the finances of its subsidiary<br />

companies, financial arrangements are generally attended to by each individual<br />

company, except in cases of large acquisition such as the case of FALCON.<br />

VINAMARINE, on the other hand, has its own investments for expansion, thus, it<br />

cannot anymore extend assistance to its subsidiaries.

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