In business, standing still means going backwards.

In just half a year, Hai An has received 4 newly built ships. Why don’t you buy used ships like many other businesses choose ?

Building new ships is the company's long-term plan, which we have implemented since September 2021. This is the year when the world's maritime industry has had certain growth after a long period of stagnation. In the first 6 months of 2021, Hai An took advantage of the opportunity and bought some old ships at quite good prices such as Haian East, Haian West.

The company planned to continue investing in more ships, but at that time, the market for used ships was gradually increasing, and it was impossible to buy used ships. Therefore, building new ships was an option.

At that time, some of Hai An's ships were over 20 years old, so building new ships was part of the company's fleet restructuring policy. New ships could help the company expand its production and business activities, replacing old ships that were reaching "retirement" age.

Especially in the context of the world maritime industry increasingly tightening regulations related to the environment and reducing greenhouse gas emissions, building new ships is necessary to meet our new plans.

After 3 years, up to July 2024, the project will be completed. After receiving 4 ships (December 2023, March 2024, May 2024 and July 2024), the company has put 2 ships into operation on domestic routes and 2 ships for charter in foreign markets. Fortunately, at this time, domestic freight rates and charter prices are both good, increasing compared to 2023.

From May 2024, we can clearly see the market progress in terms of charter rates as well as freight rates, so everything is quite favorable.

There have been predictions that the maritime market in 2024-2025 will have an oversupply as recent growth has caused many shipping lines to buy new ships, and the world economy is still volatile . At that time, how did Hai An consider this issue?

We have calculated for many scenarios, including the worst-case scenarios. In other words, if there is a risk, it is a “calculated risk”. If the market goes down, the company will liquidate the old ships because there are still some ships over 20 years old still in operation.

On the other hand, the size of newly built ships of about 1700-1800 Teu is suitable for both domestic and intra-Asia routes, so the demand for chartering these ships is expected to be good in the future.

Currently, after the company receives all 4 ships, it is also the time when sea freight rates increase. Domestic freight rates have increased by about 20-30% compared to 2023. The newly built ships are about 20% more fuel-efficient than old ships of the same size, contributing to improving the company's service quality when operating domestically.

In the domestic Asian market, recently, fares have also increased by about 30-40%, although not as good as long-distance routes.

He said the new ships are designed to meet environmental standards and save fuel. So how competitive is Hai An's new fleet compared to its competitors ?

Newly built ships in China meet international conventions, especially in emission reduction requirements. These features ensure that ships operating domestically will be fuel and energy efficient compared to ships of the same size.

For foreign markets, if the route is operated by the company itself, it will be beneficial in terms of fuel economy. If the ship is rented, it will also be given priority in selection because it meets technical standards. This means that in case the charter market is difficult, the company's ship will be given priority in selection.

In the case of a vibrant market, high rental prices, good quality ships will be rented at higher prices than older ships. Of course, when operating costs are economical, the competitiveness of ship fares is also better.

Why did you choose to build in China, while there are many shipbuilding facilities in Vietnam, sir?

Negotiations and signing with the Chinese shipyard took place very quickly, only from July to October 2021.

The company's 4 newly built ships are arranged by the factory in order 15, 16, 17 and 18, which means that before building the new series of ships for Hai An, the factory had built 14 new ships of the same series for customers who are major shipping lines in Europe, China, Japan, etc.

Therefore, we are quite assured and do not waste time negotiating the design and quality of the ship.

In fact, at this time, the Covid 19 epidemic is breaking out, so traveling is almost impossible. The company has no opportunity to discuss with shipyards in Vietnam for this project.

Besides, choosing to build ships in China is also related to cost and progress. Their shipyards are more advantageous than those in Vietnam because they have a design department, a manufacturer of machinery, components and equipment, so the progress is much shorter than in our country.

Meanwhile, in our country, most of the equipment and materials have to be imported from abroad. We only have workers and production departments. The basic designs of container ships such as Bangkokmax, Chittagongmax... we still have to buy from abroad. These are the obstacles that prevent the progress of shipbuilding in our country from being as fast as in China, Japan or Korea.

It must also be said that it is not simple for a Vietnamese enterprise to order shipbuilding abroad.

Chinese shipyards can sign contracts, but they are very careful in choosing the contractor. Is the contractor reputable, how they operate in foreign markets, what is their financial capacity, etc. They are afraid that during the ordering process, the contractor will "run away".

With those factors, a Vietnamese private enterprise will face many difficulties in negotiating and signing contracts.

Of course, some businesses in Vietnam have good financial potential, but if they order new ships to be built abroad, I think foreign shipbuilding units will have certain concerns.

That is also our problem because international experience and knowledge is very little.

In Vietnam, we can be a big company, but internationally, they don't know who we are. When we raise issues, the factory also asks many questions.

However, Hai An's strength is that it has a relatively good reputation in the market. They can rest assured when seeing that the company has been listed on the HOSE since 2015, all information is public and transparent.

Hai An's fleet has continuously carried out time charter activities to customers who are major shipping lines in the world since 2017.

I know that recently, the shipbuilding capacity of Vietnamese enterprises has been developing well, and the quality of shipbuilding has also been improved over time.

Recently, two shipyards, Nam Trieu and Ha Long, have launched bulk carriers with a capacity of up to 65,000 DWT.

The company hopes to cooperate with Vietnamese shipyards for future new construction projects. I would like to share that the company's Haian Mind is also a 1,700 Teus ship built in Vietnam in 2012.

Vietnam is encouraging businesses to invest in and develop the national fleet. However, of Hai An's four new container ships, only two are flying the Vietnamese flag. Can you share more about this?

Currently, the company has a large number of ships, so out of the 4 newly built ships, we do not intend to exploit 2 ships in the Vietnamese market. These 2 ships fly a convenient flag to serve long-term time charter activities in the international market.

Ships flying the Vietnamese flag will help increase the country's container fleet, but one of the common concerns of shipping businesses is that when registering ships flying the Vietnamese flag, they need to pay 8% VAT (previously 10%).

Of course, the mining process will be deductible but the time will be quite long, affecting the business's cash flow.

Recently, businesses have made recommendations to management agencies for consideration and adjustment in relevant regulations.

In fact, the younger the ship, the more expensive it is, and businesses must carefully calculate capital, cash flow, and financial capacity when investing.

Therefore, businesses really hope that the State will have policies to support finance, reduce VAT when registering ships flying the Vietnamese flag, or support businesses with good bank loan interest rates, increase the age limit for registered ships from 15 to 17 years old...

With that support, I think not only Hai An but also other businesses will feel secure to invest and develop their fleets, and more broadly, develop the national fleet.

So will Hai An continue to invest and rejuvenate the fleet in the future?

After 15 years of operation, we have an advantage over other businesses in having a relatively large container fleet.

Investing in 1-2 more ships may be risky or difficult, but it is still supported by the old fleet, which was invested a long time ago and has fully depreciated.

Currently, the company has completed the newbuilding project, but we still plan to continue to develop the fleet, both newbuilding and used, and develop services outside.

Our view is that in business, standing still means going backwards. Today, competitors are always on the move, looking for ways to improve service quality and market share.

Therefore, despite the advantage of a container fleet, the company's management always has to ask what to do in the next 3 or 5 years, and even make longer-term plans.

With a total of 15 ships owned and operated by the company, the domestic market is too small. Suppose the company brings in another 1700 Teu ship, if not calculated carefully, it could create a surplus crisis in the domestic market.

This not only affects other businesses but also Hai An itself. Because if supply increases but demand does not increase, it will affect freight rates, leading to unfair competition.

Therefore, the number of ships we regularly operate in the domestic market is only about 4 ships and mainly chartered outside. The company is also looking for opportunities to open external routes such as maintaining the Hai Phong - Hong Kong - Southern China route.

At the same time, continue to expand the network of operations instead of focusing only on the domestic market. The company still plans to expand to the Chinese market, reaching the Ningbo, Shanghai, and Western India areas.

Earlier this year, the company partnered with shipping line ONE to open a route to Singapore. Last year, the Hai An – ZIM joint venture also joined the shipping route connecting Vietnam – Malaysia – India.

To be honest, the joint venture with ZIM started operating in March 2023 and was still losing money until May this year. But from June to July this year, the joint venture's operations started to turn a profit due to the warming market and increased freight rates.

Does the company plan to expand to further markets such as Europe and the US, sir?

In the past 5-6 years, the shipping market has fluctuated very quickly. In the short term, there are shipping lines that suddenly have the courage to open routes to the US and make big profits if the market is favorable.

I think those are also positive factors in the short-term market. We ourselves always have positive thinking for both the short-term and long-term markets.

In the long term, we are considering larger ship sizes and the next step is 2,800-3,500 TEU ships to accommodate future growth. In the next 10 years, the company aims to expand its network and operate stably in the intra-Asian market.

Thank you!

Source: https://www.baogiaothong.vn/chu-tich-hai-an-trong-kinh-doanh-dung-yen-co-nghia-la-thut-lui-192240820204842562.htm