Vietnamese shipping firm Vinalines sells boats to stay afloat

Vietnam’s largest state-owned shipping firm and port operator, has been forced to put six ships up for sale as the global shipping crisis takes its toll, the shipping firm said in a document sent to the Ministry of Transport.Vinalines has set a target of selling six ships, including 20-year-old ships that can carry cargoes of more than 70,000 in dead weight tonnage (DWT).

Vinalines is a victim of the global shipping slowdown that started in 2008 and has yet to show signs of a recovery, the shipping firm said.

The Baltic Dry Index, which is a measure of the price of shipping bulk cargoes around the world, especially large bulk dry cargoes such as grain, iron ore and containers, has slipped by 80-90 percent over the past seven years.

The index at some point was down to 290, 98 percent down from its peak during 2006–2008.

It now stands at 293, nearly 50 percent down from a year ago, and almost 40 percent down so far this year.

The loss-making shipping group said that adverse market conditions had led to mounting company losses over the past few years.

Vinalines said it would sell at least three of the six ships for around 10 times less than it paid for them. For example, Vinalines Star, which was bought for VND378 billion, is up for grabs for only VND34.4 billion.

The Vietnamese government established Vinalines in 1995, adopting the operating model of South Korea's giant conglomerates known as “chaebol”.

However, Vinalines reportedly incurred losses of VND434 billion in 2011 while it was running 14 ports and managing 154 ships, mostly cargo vessels and oil tankers.

According to government inspectors, Vinalines spent more than $1 billion between 2005 and 2010 to buy 73 second-hand ships.

The shipping line also spent $9 million on an old floating dock from a Singaporean firm that had a price tag of only $5 million, and then spent $26.3 million on repair work.

The unused dock was mocked by the press as an “iron heap”, symbolic of Vinalines’ losses, as criticism came flooding in of misspent state funds and the company’s lax management.

Earlier this week, Vinalines managed to sell the floating dock for a meager $1.7 million.