Illustrative image (Source: Vinalines)
Hanoi (VNA) - By restructuring its debt and fleet, and stepping up maritime transportation and seaport services, Vietnam National Shipping Lines (Vinalines) has set sail again after emerging from choppy waters.
Gains, losses generated by Vinalines
Over the years, Vinalines has focused on recovering production and business, as well as restructuring its debt. Thanks to seaport and maritime transportation services, the corporation has initially reduced losses. In 2018, its accumulated profits were estimated at about 130 billion VND (5.59 million USD), the best result Vinalines has recorded over the past five years.
In the 2010s, with a strong fleet with total capacity of 2.8 million tonnes, the corporation nearly dominated the domestic maritime transportation sector, contributing close to 4 trillion VND (172 million USD) to the State budget.
However, since late 2008, the global financial crisis and economic downturn have seriously affected the navigation sector, making maritime transportation fees drop sharply and turnover from the sector fall. As a result, Vinalines generated a loss and stood on the brink of demise. Given this, then Prime Minister Nguyen Tan Dung approved a project to restructure Vinalines during 2013-2015.
Tran Tuan Hai, head of Vinalines’s Development Strategy and Communications Division, admitted the biggest difficulty in restructuring lay with how to prove the feasibility of the project to State management agencies, and raise confidence of credit and banking organisations in Vinalines’s ability to improve its business and handle its debt.
According to Hai, the corporation’s debts exceeded 67.5 trillion VND (2.9 billion USD) in 2013 and its turnover was not enough to cover interest rates.
“Vinalines began restructuring its debt, keeping it balanced with the group’s assets, and transforming the debt into shares, while restructuring the fleet and divesting capital from loss-making businesses,” he said.
Nguyen Canh Tinh, Acting General Director of Vinalines, said in 2016-2017, the seaport and logistics sectors still earned profits although maritime transportation was facing difficulties.
“After four years of negotiations with banks, Vinalines’s total debt decreased from 67.5 trillion VND (2.9 billion USD) in 2013 to more than 20 trillion VND (860 million USD) in 2018, and cumulative losses contracted from more than 23 trillion VND (989 million USD) to about 3.2 trillion VND (137.6 million VND) during the period. The group began to generate profits from business and owners’ equity increased remarkably from over minus 8.7 trillion VND (374.1 million USD) in 2013 to nearly 8 trillion VND (344 million USD) at present,” he said.
[Vinalines’ restructuring plan approved]
Amidst the maritime transportation sector warming up, Vinalines has reaped fruits in seeking partners, instead of waiting for them as they did previously.
Following marked changes, the group has successfully equitised since September 2018, with more than 5 million shares registered for trading. Although the number remained limited, this signals that Vinalines has not been wrecked after various twists and turns but moved forward to transform itself, according to its leaders.
Recover “health” to set sail
After experiencing multiple difficulties, the maritime transportation market has stabilised. However, transportation and ship leasing costs remain low, Vinalines Chairman Le Anh Son said. Following the downturn of the sector, private ship owners have invested in ships with low prices, thus raising their competitiveness and dominating the domestic market.
“Besides, alliances between foreign shipbuilding companies and seaport firms and shipbuilding companies, or the presence of complete private services suppliers have created fierce competition between local maritime transportation enterprises, affecting the market share of navigation services enterprises,” Son said.
Seaports and logistics remain major strengths of Vinalines (Photo: VNA)Nguyen Canh Tinh, Acting General Director of Vinalines, expressed his belief that strength in infrastructure would create momentum for Vinalines to move forward, adding the corporation is focusing on three main sectors of seaports, maritime transportation and navigation services.
Tinh said the corporation will increase its participation in transportation auctions and bid for major auctions like coal, ore or materials for industrial parks or big factories.
According to Dr. Le Quang Trung, Vinalines Deputy General Director, with advantages of infrastructure in seaports/maritime transportation and logistics, Vinalines (VIMC) will devise the best market solutions with reasonable costs. Accordingly, VIMC will optimise its strength in the operation network that covers maritime transportation, seaports and logistics. At the same time, it will bring into full play the strengths of its subsidiaries.
To improve production and operation efficiency of Vinalines’s member businesses in all three spheres, Trung has paid special attention to connectivity between the member companies.
“Reviewing, assessing and utilising outstanding the and strength of each enterprise play an important role in designing services packages with the involvement of all three spheres,” Trung stressed.
Trung said Vinalines will place importance on market development with customers as the centre, and their satisfaction the gauge of its values. Besides, Vinalines will develop chains of services by optimizing the resources and capacity of its subsidiaries to devise comprehensive solutions, thus offering the lowest logistics price and the highest-quality services to customers.
These solutions aim to turn Vinalines into a prestigious supplier of solution packages that cover all steps from transportation to seaport exploitation and hand-over to warehouse under the “Door to Door” model. The corporation is expected to form global supply chains and make use of its subsidiaries, meeting the demand of both domestic and foreign customers. In the short-term, it will focus on some major products.
Transport Minister Nguyen Van The has regarded Vinalines as one of the groups that receive huge investments.
About six years ago, Vinalines was in a gloomy state. During restructuring, the corporation has met a range of difficulties as its gains could not cover its spending, and the corporation stood on the edge of bankruptcy, he said.
Over the past five years, Vinalines has been a ship that surpassed huge waves, The said, highlighting the corporation’s successful restructuring, which has been reflected through its profits in 2016 that increased each year, given the debt amounting to tens of thousands of billions of Vietnam dong and expanding annually.
Vinalines has not been wrecked as people thought but moved forward, The said.-VNA
