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​Why do port enterprises propose to increase container handling services?

13:23 | 15/11/2018

VCN - At present, the Ministry of Transport is drafting a circular of schedule of pilotage service charge, services for using wharves, anchor buoys, container loading services and seaport towing services in Vietnam to replace the Decision 3863 / QD-BGTVT. The adjustment of the service tariff is expected to help seaport enterprises having the opportunity to develop and increase revenues for seaport enterprises to reinvest their infrastructure and pay the budget without increasing the consumer price index (CPI).

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Currently, container handling rates in Hai Phong are at the lowest level in the region, causing direct damage to businesses. Picture: ST.

Price is pressed, isn’t it?

Comments on the draft Circular, representatives of enterprises in Hai Phong Port said that according to the Decision 3863 / QD-BGTVT, the prices of loading and unloading containers for export, import, temporary import for re-export Region I is only 66% of Region II and 73% of Region III. In particular, the price in zone I is 30 USD / 20 foot container, 45 USD / 40 foot container, while in container II the price of 20 foot containers is 45 USD / container, 68 USD / 40 foot container and Region III price is $ 41/20 foot, $ 62/40 foot.

Currently, the volume of containers exported and imported through Hai Phong is highly diversified across regions. Ports upstream of Bach Dang Bridge (No.112 port, Doan Xa port, and port 198) are located far upriver and the channel is limited. Therefore, it mainly carries out domestic container handling and less than 20% of container export and import market. Most of the ports have low investment and equipment facilities have depreciated, so to attract imported and exported containers of foreign shipping lines, ports are usually contracted at very low prices. Only about $ 22-25 per 20 foot container, this price is only enough for the port to maintain business activities without the capital to reinvest the infrastructure.

However, for the downstream ports of Bach Dang (Hai Phong, Dinh Vu, Green Port, Dinh Vu Petroleum Services, Nam Dinh Vu, and Nam Hai Dinh Vu ports) they account for over 80% of the market share of containerized and exported goods through ports in the region. Before issuance of Decision 3863, most of these ports were maintained with the shipping line price of $ 32-35 / 20 foot, Dinh Vu port has an average price of $ 37-38 / 20 foot container. But after Decision 3863 came into force, shipping lines took the minimum price to force prices, forcing ports to reduce prices by a minimum of $ 30 per 20 foot. This has caused direct damage to the revenue of the port, particularly Dinh Vu port’s revenue in the last 6 months of 2017 reduced 30 billion, Hai Phong port decreased $ 5 million (equivalent to 100 billion).

Two options increase prices

"The reason why foreign shipping companies can squeeze ports is the very large surplus supply of seaports in Hai Phong. If the ports do not reduce contract prices, foreign shipping companies will immediately replace by finding another port. As a result, 100% of the ports are under pressure from shipping companies. This causes direct damage to port revenue, which reduces revenues and thereby indirectly reduces the taxes that a port can add to the state. Meanwhile, foreign shipping lines are charging surcharges at port of export (THC) for domestic importers and exporters at US $ 100/20 foot, and US $ 150/40 foot. Shipping lines are not subject to this reduction, so importers and exporters in the country are not entitled to any benefit from the application of the State minimum price. The difference is that port enterprises can collect to reinvest in favor of foreign shipping," representatives of Hai Phong port enterprises added.

Further analysis of the cause of the above situation, Vietnam Maritime Bureau (Ministry of Transport) said that in terms of scale, total of investment and quality of some ports in Hai Phong are similar to ports of the countries in the region, but the price of unloading is only from 20-51% of the price of other countries (Thailand's port $ 59, Cambodia $ 65, China $ 97, Singapore $ 111, Hong Kong (China) $ 130, Myanmar $ 165).

Remarkably, compared with previous years, the rate of loading and unloading containers and export of Hai Phong area has been decreasing, at present the price is the lowest ever, only equal to 63% compared to before 2010. At the previous time Hai Phong port has been collecting at the price of 48 USD. Ports are competing to reduce prices to attract goods, while fuel costs, labor costs and equipment costs are increasing.

Talking to Customs reporters, Do Xuan Quynh (General Secretary of Vietnam Ship Owners Association) said, now shipping enterprises are mainly small and medium enterprises, even very small without capital. As a result, most of Vietnam's export containers are completely dependent on foreign ships, so they have fallen into price squeezes, surcharges, and there are not many options. In particular, the freight is also subject to the agreement of the owner with the ship owner. The Vietnamese side is not involved in determining the rates for these routes and as long as we depend on foreign businesses, this situation will continue.

Therefore, the adjustment of the rates of loading and unloading containers for import and export, temporary import and re-export of region I is very necessary and Vietnam Maritime Bureau has proposed two price increases.

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Accordingly, option 1 is, in the immediate future will increase 10% of container handling services, after one year of implementation will continue to evaluate and adjust prices accordingly. Option 2 is to adjust the rate of container loading and unloading services in Zone I by Region III and apply it in accordance with the roadmap and 2019 shall be equal to 80% of the price frame. In 2020, 90% of the price bracket shall be applied and 20% shall be equal to 100% of the price bracket. However, this project has not assessed the actual impacts of price increases according to the roadmap of 2019, 2020 and 2021.

By Xuân Thao/Bui Diep