Shipping enterprises actively upgrade their fleets

Taking advantage of rising sea freight rates, many businesses actively hire, receive and plan to build new ships with large tonnage.

In early July, PetroVietnam Transportation Corporation (PVTrans - PVT) through a member unit received the first VLGC refrigerated liquefied gas carrier - NV Aquamarine. This ship is built in Japan, belongs to the world's largest refrigerated liquefied gas carrier group with a cargo capacity of 81,605 CBM.

This is the third time in the year that PVTrans has expanded its fleet. Before that, this business used to receive PVT AZURA in early February and PVT DAWN a month later. According to SSI Research, PVTrans has spent a total of VND1,400 billion on the purchase of the three ships mentioned above.

According to self-published information, PVTrans is currently the only shipping company in the Vietnam National Oil and Gas Group that owns the largest liquid cargo fleet in the country, including 34 units with a total tonnage of about one million DWT. To improve transport capacity, this enterprise plans to invest 15 more ships.

The above plan is set in the context that PVTrans maintains its domestic market share and continues to expand into the international market with 80% of its fleet operating in many regions. PVTrans started to participate in high-standard transportation markets such as Europe, North America...

Vessel NV Aquamarine that PVTrans has just received. Photo: PVT

Needing capital to buy two ships for production and business, SPK International Transport Joint Stock Company (Gas Shipping - GSP) decided to offer another 20 million shares to collect 200 billion dong. All the money will be used to buy two oil and chemical tankers with a tonnage of about 20,000 DWT each. The price of the ship is 376.5 billion VND each, Gas Shipping takes from its own capital and issues about a third more, the rest is borrowed. It is expected that the enterprise will receive the ship at the beginning of this month and be ready for exploitation right in the Americas market.

Explaining more about the plan to buy ships, Gas Shipping's management said that the two new ships help create favorable conditions and increase competition for businesses when exploiting the international market. Gas Shipping's current fleet is aging and its competitiveness is reduced. The average age of 6 existing ships is 22 years old, the exploitation capacity and efficiency are not high.

Also in August, Vietnam Shipping Joint Stock Company (Vosco - VOS) announced a plan to charter Vinalines Galaxy with a tonnage of 50,530 DWT from Vietnam National Shipping Lines (MVN), the parent company holding 51%. Vosco capital. The value of the chartering contract is more than 75 billion VND.

According to the 2020 annual report, Vosco owns a fleet of 12 ships with a total tonnage of 405,112 DWT including 8 dry cargo ships, bulk carriers, two oil product vessels and two container ships. Along with a number of time chartered vessels, the total number of regular fishing vessels is about 12-14 vessels. The goal of this company for the next period is to gradually increase the proportion of outsourced vessels to 20-30% of the total tonnage of the fleet. Vosco's fleet operates widely around the world, but operates regularly in regions such as Southeast Asia, Northeast Asia, West Africa, Oceania, South America...

Also planning to upgrade its fleet in the future, Hai An Transport and Handling Joint Stock Company (HAH) will build a new 1,800 teu SDARI Bangkok Max IV container ship in China in the period 2021-2024. Along with that, the company will buy two old ships of 1,000-1,500 teu to use for the short route Hai Phong, Hong Kong - South China and Central, Cai Mep - Ho Chi Minh City.

Previously, Hai An invested in new ships HaiAn West (1,740 teu) and Hai An East (1,702 teu) after buying HaiAn View (1,577 teu) in July last year. By the end of 2020, the company has 8 ships with a total capacity of 10,000 teu, mainly operating domestic and Asian routes. In the future, Hai An wants to invest in buying three 1,000 - 1,700 teu container ships to ensure an increase in the number of domestic routes to 5 times a week, maintaining the Hong Kong and Singapore routes.

A container ship docked at Gemalink port for loading and unloading. Photo: Truong Ha

A series of businesses have actively rejuvenated and increased their fleet in the context of the shipping industry with good growth prospects. The logistics industry update report of SSI Research states that businesses that own large-scale fleets are benefiting from the trend of escalating freight rates.

While the freight rates for bulk and liquid cargo are quite stable, the container freight rates have increased 4 times compared to the pre-epidemic level. In particular, in some routes with high transport demand, freight rates have even increased 4-8 times in a year.

In the coming time, freight rates have not cooled down and the potential for goods movement is still large, which is the growth engine of the shipping group. In fact, businesses have recorded positive business results in the first half of the year.

Demand is high, freight rates are high while ship trading prices are maintaining at low levels. Gas Shipping refer to Clarksons statistics showing that the price of oil and chemical tankers is at the lowest level in the past 10 years. This enterprise assesses that this is an opportunity to invest, contribute to efficiency and reduce long-term risks.

However, SSI Research also mentions the risk of chartering or building new ships when freight rates in the transport market reverse or are delivered when demand is no longer high. Freight rates may peak in the last quarter of the year, then adjust slightly in the first half of 2022. Rates may drop significantly in 2023 when the supply of new ships comes into operation, but remain at a level higher than the pre-pandemic level.

+ OTHER POST:

• The world's third largest shipping company commits not to increase freight rates(29.10.2021)
• Troubleshooting maritime activities(29.10.2021)
• The creek is not clear, it is difficult for ships to dock at Phan Ri Cua fishing port(29.10.2021)
• Scarcity of empty containers due to Covid-19 and trade surplus(29.10.2021)
• Vietnam's seaports are open and ready to receive goods at the end of the year(27.10.2021)
• Sea freight rates increase gallop: Businesses are struggling, shipping companies are miserable(27.10.2021)