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Overview of Vietnam's port and shipping industry

Overview of Vietnam's port and shipping industry

Wednesday 16, 08 2023
The gloomy global economy and declining consumption have greatly affected the shipping market, including that of Vietnam. The seaport areas in Vietnam with the highest clearance volume in the country all decreased.

Chartering market are getting worse in 2023

At the end of 2022, the container charter market was in a completely different mood compared to the same period in 2021. The decline in consumer demand, high inflation and political instability have led to a severe recession of the market since the end of the third quarter. To date, charter rates have decreased by 65% to 80% compared to the historic peak reached in March 2022.

Chartering market are getting worse in 2023

The prospect of market development is fraught with difficulties. On the supply side, according to Alphaliner, most of the tonnage on order will be delivered in 2023 and 2024. Specifically, there will be 2.34 million TEUs in 2023 and 2.83 million TEUs in 2024, much higher than in 2021 and 2022.

This will cause the container shipping sector to enter a downward cycle in the period of 2023 - 2024 when a large number of container ships will enter the market amid stagnant demand. Even orders that are likely to be delayed or canceled will not be fully exploited if demand and old ship demolitions do not increase sharply.

In terms of demand, the possibility of an economic slowdown in many countries, persistently high inflation and geopolitical uncertainty keep energy prices at high levels, further hampering general trade and container shipping.

However, China's reopening move after a long period of persistence with the Zero COVID policy and reduced sea freight rates will help reduce the negative impacts, thereby creating a recovery in consumer demand and promoting the return of trade activities.

Besides, oil prices are forecasted to cool down due to weak consumer demand. The EIA forecasts that Brent oil prices will remain at $83/bbl in 2023, down 18% from 2022, and may continue to fall to $78/bbl in 2024 as global inventories rise, putting downward pressure on oil prices. This will help reduce fuel costs for shipping businesses.

Mr. Nguyen Ngoc Canh, Vice Chairman of the Committee for the Management of State Capital at Vietnam National Shipping Lines Corporation (VIMC), said that the movement of the dry cargo ship market in the last 6 months of the year is forecasted to have more positive changes.

According to leading market research firms, the growth rate of the dry cargo ship market in 2023 will reach 1.5 - 2.5%. However, in the second half of 2023, the number of newly built dry cargo ships delivered at a high level will still have a strong impact on ship supply and spot prices will hardly grow to the high levels seen in 2022.

The container ship market

The container ship market in the second half of 2023 is forecasted to move slowly due to the high number of newly built ships delivered (120 units). In the current context of low demand for freight, there will be an oversupply situation. Shipping lines are expected to continue to reduce freight rates like they did in the first half of the year to ensure fleet operations.

Goods imported and exported through domestic seaports

The total volume of goods through Vietnam's seaports in 2022 was estimated at 733.18 million tons, up 4.28% compared to 2021. This result has a large contribution from domestic goods which was 342.79 tons, up 13.1% thanks to consumption power. Domestic consumption remains relatively stable. Meanwhile, exports reached 179.07 million tons, down 2.89%; imported goods reached 209.26 tons, down 2.21%. The reason is due to the Zero COVID policy of China and many key exporting countries that are engulfed in both inflation and recession.

Vietnam's seaports

The Vietnam Maritime Administration shared that in the context of the economy continuing to be difficult, it is estimated that in the first 6 months of the year, the total volume of cargo through seaports continued to decrease by about 3%, reaching about 359,467 million ton.

Previously, the volume of goods through seaports in the first 5 months of the year reached 296.102 million tons (excluding goods in transit without loading and unloading at ports), down 3% compared to the same period in 2022. The seaport areas with the highest volume of customs clearance in the country all decreased. Specifically, Vung Tau area decreased by 13%, Hai Phong decreased by 3%, HCMC. HCM decreased by 3%.

In the short term, the prospect of Vietnam's seaport industry is forecasted to face many challenges in 2023 due to the economic downturn. However, in the long term, it is still possible to be optimistic about the growth potential thanks to the new generation FTAs, policies to promote the development of the port and logistics industry of the Government.

Source: vietstock, vneconomy

Compiled by VietnamCredi


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