Title: Vietnam Shipper No. 56
Date: (01-06-2009)

Seafreight -

World Dry Bulk Shipping Market: How Did Things Get So Bad and So Fast?  

The sharp drop in world trade caused by global financial crisis has led to a huge collapse of dry bulk shipping market since the third quarter of 2008.

 

An early sign of global financial crisis was the financial turmoil interrelated housing bubble centering the United State since August 2007. The financial turmoil developed into a global financial crisis when large investment banks and financial institutions in the United State and Europe were suffering severe financial stress and went to collapse or near collapse. For instance, in the United State 16 banks went bankruptcy and more than 100 banks faced near collapse in period from September 2007 to October 2008. Under pressure of the United State-sparked financial crisis tsunami a number of large banks and financial institutions in Europe faced near collapse, for example, Dutch-Belgian bank Forties, the French-Belgian Dexia, the British mortgage lender Braford & Bingley, Dutch bank, Anglo Irish, Allied Irish Banks Plc, Bank of Ireland Plc… (UNCTAD et al., 2009).

 

According to IMF (April 2009), economic recession has begun in most developed countries since the second half of 2008, then has quickly spread to emerging and developing countries. The growth of world economy increased by 3.2 percent in 2008 compared with 5.2percent in 2007. At the time being, there are positive signals of economic recovery while consumer purchase and business confidence are getting back, although unemployment still remains, notably in the United States. …(Read more on Vietnam Shipper Issue No. 56)

 

 

Supply Chain Management -

The H1N1 Flu: Your Supply Chain Moment of Truth?

The supply chain has faced significant obstacles in 2009 with the prolonged recession and economic fears and then the Somali pirates terrorizing merchant ships along the high seas. Now, another potential problem has emerged with the swine flu that not only threatens the lives of thousands, but the economic lifeline of businesses.

 

This isn\'t the first time that an infectious disease impacted the supply chain. Severe Acute Respiratory Syndrome (SARS) struck Asia in 2003 resulting in a huge disruption in manufacturing and high-tech production with business-changing ramifications leading back here in the U.S. poultry markets. The swine flu is no different than other problems of the past but combined with economic and political uncertainty and the always-looming natural disaster creates a unique perfect storm for supply chain disruptions…(Read more on Vietnam Shipper Issue No. 56)

 

 

Logistics

High Logistics Costs Hold Back Vietnam\'s Economic Development

 Logistics costs in the market are estimated to be 20-25 percent of Vietnam\'s GDP, a ratio far higher than that in developed economies such as the US and higher even than in other developing economies such as China. These high costs have hindered Vietnam\'s efforts to take advantage of its cheap labour resource and develop the national export economy. The report puts this down to a combination of over-stretched and ageing transport infrastructure, including ports, airports, road and rail; inefficient bureaucracies, customs clearance delays; and the unwillingness of Vietnamese manufacturers to outsource to foreign 3PLs (third party logistics providers). The report additionally finds that a substantial proportion of Vietnam\'s logistics costs can be attributed to high inventory holdings. However, the report also finds that this situation is gradually changing.…(Read more on Vietnam Shipper Issue No. 56)

 

 

Shipper in focus

New Stage in the Battle Against the THC Introduction in Vietnam

 

Since 1 July 2007, all foreign shipping lines having container ships calling at Vietnamese main ports  have unilaterally imposed  Terminal Handling Charge (THC) of USD 60 on each TEU and USD 98 on each FEU. Furthermore, starting from 1 August 2008 they have one-sidedly increased this charge up to the level of USD 75 per TEU and USD 115 per FEU. When introducing  this THC each container moving to or from Vietnamese Ports, the foreign shipping lines stated that their aim was to split the  THC as well as the other surcharges from the freight component to make their freight rates more transparently and more cheaper so that they may help to increase the Vietnamese goods competition strength in the world market. Actually, it was quite vice versa because, at first glance, the integral part of the ocean freight seemed to be lowered but, in fact, the total export goods production cost was booming due to  THC addition. One thing  worthy of note is that, as the Vietnamese Ports Association explains, the real charge that the Foreign Shipping Lines have paid to Vietnam port operators  for this container handling service is only USD 40 per TEU and USD 60 per FEU. It is so they  may easily enjoy the benefit of USD 35 per TEU and USD 55 per FEU. In 2008, the total volume of containers moving to or from Vietnam reached more than 5 million units (whereof 35% was empty or used  for domestic cabotage carriage without paying THC), therefore, an extra huge amount of money had gone out of local businessmen’s purse to pour into the pocket of Foreign Shipping Lines. The absurdity also lies in the fact that most of the Vietnamese import goods are delivered on FOB terms while the export goods-on CIF or CFR terms and that the Vietnamese import or export companies have never signed the contract of carriage with the foreign shipping lines but they still have to absorb the above charge together with a number of other surcharges like: Bill of Lading surcharge of USD 15, Delivery Order Charge: USD 15 and Congestion fee....The payment of the above various surcharges and fees by Vietnam export companies has brought the consequence  that the Vietnamese-made goods competition strength in the world market has not been increased, not as advertised by Foreign Shipping Lines but, to the contrary, their goods production cost has been added by some more vague charges as cited above.

 

In the context where the world-wide financial crisis has exerted a considerable impact on Vietnam economy, while the Government is applying a number of emergency support measures such as: to extend, suspend or decrease corporate tax, or, to support the export companies in their refunding banking interests occurred from borrowing the investment capital, the above surcharges have the adverse consequences.…(Read more on Vietnam Shipper Issue No. 56)

 

 

Airfreight -

Aviation’s Role in Economic Recovery

The International Air Transport Association (IATA) called on the new Obama Administration in the US to prioritise aviation as a catalyst to stimulate the US economy. “Smart investments - not bailouts - in air transport will pay-off with jobs and boost other industries,” said Giovanni Bisignani, IATA’s Director General and CEO.

 

In a speech to the Wings Club in New York, Bisignani urged the Obama Administration to go beyond the airport investments in the White House Agenda. “The US air traffic management system is in desperate need of an upgrade. Airlines and airports cannot be efficient economic catalysts if we operate in gridlock. I urge the President to allocate the US$4 billion needed to get the ball rolling with the first phase of the long-awaited NextGen project that will create some 77,000 jobs in the US economy,” said Bisignani.

 

IATA also urged the Obama Administration to deliver broad policy changes in the areas of security, environment and commercial freedoms .…(Read more on Vietnam Shipper Issue No. 56)