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Shipping businesses are on the way to recovery

Sea freight continues to recover and break through

It can be seen that the outbreak of the COVID-19 pandemic continues to push the maritime industry into a difficult position. Production and business activities in many countries around the world were halted, causing a decline in global trade demand. Seaports were forced to close due to social distancing requirements. However, that did not make the shipping industry decrease, on the contrary, it increased both in frequency and volume.

According to Deputy Director of the Vietnam Maritime Administration Nguyen Dinh Viet, in 2021, although maritime activities are greatly affected by the COVID-19 epidemic, the total volume of goods through Vietnam’s seaports is still estimated at more than 703 million tons, up 2% compared to 2020.

Accordingly, with the increase in freight rates and severe port congestion as mentioned above, shipping companies have risen like a kite in the wind. Most notably, the shipping group, Hai An Transport and Loading Joint Stock Company with a list of 8 ships announced its revenue in 2021 is 1,955 billion, up 64%, profit after tax is 446 billion, an increase of 223% compared to 2020. Besides the increased freight rates, the company also benefits from high long-term rental rates. Currently, the unit leases 4/8 ships, of which the rental price for many ships is now double that of the beginning of the year.

Next, Vietnam Maritime Corporation (VIMC) announced revenue of more than 19,000 billion dong, up 24% compared to 2020. Profit is estimated at 3,750 billion dong, 5.5 times higher than the plan. In particular, Vietnam Shipping Joint Stock Company (Vosco) also unexpectedly exited losses in the second and third quarters of last year, leading to the highest 9-month cumulative profit in the history of operations. Many other shipping companies such as Vinaship or Dong Do also reported profits after many years in the “sea of ​​losses”.

Shipping enterprises are on the way to recovery - Photo 1.

Shipping businesses report soaring profits in 2021

According to economic experts, in 2020 and 2021, the whole of humanity will be greatly affected by the COVID-19 pandemic, but it will not reduce the shipping industry, on the contrary, it will increase both in frequency and in storage capacity. quantity. However, in “danger” there is “opportunity”. Due to the demand for essential goods when the epidemic broke out.

Commodities such as: food, medical supplies, personal items… in major foreign markets increased while Vietnam has great resources in supply. Besides the need to recover production economy after the pandemic, factories in Vietnam also need to import a large source of raw materials for production and commercial goods for domestic consumption.

At the same time, Vietnam is well prepared in terms of plans and strategies for COVID-19 prevention. The goal of epidemic prevention and economic development at that time was determined as a dual goal to ensure the safety of the people and meet the maximum export supply.

Thus, with the new foundation from 2021 being established, along with the transformation with new trends, shipping businesses are said to continue a breakthrough 2022.

Opportunities and challenges are waiting for shipping enterprises

In the report “Prospects of seaport industry in 2022”, experts of Vietcombank Securities Company Limited (VCBS) said that the high vaccination rate, especially in big cities, is a factor supporting operations. Seaport movement is smooth. Production and circulation of goods will be restored and are less likely to be subject to the large-scale blockade measures like last year.

Given the fact that strong shipping demand is fueled by the need to restock inventories, port volume growth could improve from the aforementioned 2021 lows, or the proposed increase in port service prices. If approved, these will be positive supporting factors for the continued ascension of the shipping industry in 2022. Even shipping businesses will establish a new profit base in the period. next.

In fact, with high profits, many shipping lines are actively consolidating internal resources to maintain their position. Besides the traditional activity of ordering new ships, which has grown very rapidly in recent years, some major shipping lines have their own strategies to do so.

According to experts, the period of favorable freight rates has brought container shipping businesses abundant financial resources for their fleet expansion investment plans. Thereby, reducing pressure on business results during the period of declining freight rates.

In the long term, the growth potential of Vietnamese container shipping enterprises is still quite large. Especially when Vietnamese shipping enterprises possess outstanding advantages and benefit from the great demand of inland container transport activities connecting cargo gathering points, inland ports and deep water ports. Water transport activities have clearly demonstrated many advantages compared to road transport during the epidemic period.

Shipping enterprises are on the way to recovery - Photo 2.

Prime Minister inspects Lach Huyen International Port operation

The manufacturing economy is gradually recovering and the growth momentum is impressive, the increased import and export volume creates opportunities to add value, so the service capacity of sea transport must be improved.

Successful disease control and adaptation in 2022 will create great opportunities for the shipping industry in general and shipping businesses in particular when production and business activities are stabilized and developed. This is a great opportunity for enterprises themselves to restructure, invest in human and material resources to promote the shipping industry to continue to recover and break through.

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