A recent survey in Hai Phong city, one of Vietnam’s major ports and shipping centres, showed that most shipping firms say they have been facing big difficulties due to lack of import-export commodities and orders for carrying goods from foreign partners.

A paradox exists that while expenses are high, the world’s shipping fees have been decreasing. The price of FO oil, the main fuel for ships, which was $300/tonne previously, has climbed to $700/tonne.

Meanwhile, container shipping fees had dropped by 30-50 percent by the end of Q1 2009 in comparison with the same period of last year. The fee for carrying oil has also dropped dramatically since the end of March by 20-30 percent from the end of 2008 and 30-40 percent from mid 2008.

Especially, the market of carrying bulk cargo has declined more severely than forecast. Shipping fees and ship chartering have dropped by 60-90 percent.

In the last several years, as fleets have been developing rapidly, ship owners have been facing a lack of manpower. Despite continued losses, ship owners still have had to offer higher pay in order to retain crew.

Moreover, shipping firms say that they have been burdened by bank loan interest rates. The loans they took out in mid 2008 have very high interest rates, of up to 21 percent.

Meanwhile, the firms say they are finding it difficult to access the government’s demand stimulus packages. To date, not many shipping firms have been able to get funds under the 4 percent interest rate subsidy programme, because the firms need long-term investment capital but do not have mortgaged assets.

According to the Diem Dien Transport Association in Thai Binh province, commercial banks now refuse to provide more loans for enterprises as they have overdue debts and do not have collateral. The association sent a petition to the State Bank of Vietnam, asking for a freeze of its debts or an extension on its debt payment deadline.

Trinh Xuan Nin, Deputy Chairman of the An Lu Unity Transport Association, said that enterprises need a lifebuoy in order to survive the current difficulties.

Nin suggested freezing overdue debts and extending the payment of principal of 3-4-year term loans granted to fund projects on purchasing new ships.

Experts say that if the state takes measures now to rescue shipping firms, the industry could recover by as early as the end of 2010. If no measure is taken, enterprises may very likely be pushed against the wall.