Vietnam’s state-owned shipping giant Vinalines is moving towards participating in international markets by co-operating with shipping lines and owners of mines worldwide to reach its ambitious growth targets in 2018.
According to Le Quang Trung, newly-elected vice president of Vietnam National Shipping Lines (Vinalines), the company has plans to set up several international alliances, focusing on the two key business segments – shipping, and logistics.
In shipping, Vinalines will restructure its fleet, focusing on long-term contracts and key large-volume commodities such as coal, ores, steel, cement, and clinker while creating more two-way shipping services.
“We plan to set up consortiums with international shipping lines, owners of mines, and suppliers to provide shipping and logistics services to on-site works,” Trung told VIR.
“For example, we are working on the possibility of setting up an alliance with owners of coal mines in East Kalimantan, a province of Indonesia, which is thought to have one of the world’s largest coal reserves. We will be responsible for coal transportation and logistics to the site, while coal supply is done by the partner,” he said. “Aside from Indonesia, we also worked with potential partners at the recent Eastern Economic Forum in Russia, discussing future co-operation in the field.”
Vietnam now imports coal mostly from Indonesia, Australia, and Russia to feed coal-fired power projects and steel mills in the country. Therefore, Vinalines is playing leapfrog to cash in on this growing local demand.
For container goods, Trung elaborated that Vinalines will develop inland domestic transportation networks while co-operating with international main line operators to provide cargo consolidating and feeder services for them, as well as developing intra-Asian container routes and two-way shipping routes. Forecasting a 10 per cent growth in goods of volume shipped via its ports this year, Vinalines is working on market and logistics solutions to increase competitiveness by establishing a chain of logistics centres domestically and abroad which target commodities imported and exported from Vietnam, thus joining to the global supply chain.
“At present, we are working on the Vietnam House project in Belgium in co-operation with Belgian logistics corporation Herfurth. We have finished the business plan and have begun providing services on trial for some items such as textiles and garments and pharmaceuticals,” Trung said.
Another emphasised plan is developing North-South Ro-Ro shipping services and offering one-stop package solutions to clients by utilising the combination of shipping, port, and logistics infrastructure.
In 2017, Vinalines’ logistics and port businesses showed signs of thriving amid stiffening competition, with increased profits reported. The company’s estimated profit was VND515 billion ($23.5 million), nearly double that of 2016.
Despite difficulties in the global shipping market, Vinalines’ shipping business saw improvements in 2017 thanks to a growing cargo trade volume. However, the firm still experienced a loss.
This year, Vinalines aims for growth in profit, revenue, and volume of goods no lower than the country’s GDP growth, or that of similar regional industries. With better business performance and bright potential ahead, Vinalines has become more attractive to domestic and foreign investors ahead of its initial public offering, which is scheduled to take place in the second quarter of 2018. Many investors from Japan, the US, Singapore and South Korea have expressed strong interest in becoming strategic investors of Vinalines.