World Wide Journal of Multidiscip linary Research and Development

WWJMRD 2019; 5(11): 70-74

www.wwjmrd.com
International Journal
Peer Reviewed Journal Opportunities and Challenges for Shipbuilding
Refereed Journal
Indexed Journal industry
Impact Factor MJIF: 4.25
E-ISSN: 2454-6615
Duong Le Hung, Dong Thi Minh Hao, Vu Minh Thai, Nguyen Danh
Duong Le Hung Chan
Ho Chi Minh city University of
Transport, Ho Chi Minh city,
Vietnam Abstract
Most of the ports are currently owned and managed by state-owned and private enterprises, only 4
Dong Thi Minh Hao ports have been invested by the state budget in the recent period, while the state still holds the
Ho Chi Minh city University of ownership, infrastructure and leasing organization. Vietnam Maritime Administration is the agency
Transport, Ho Chi Minh city, assigned to act as the representative to sign contracts to lease and operate bridges of 5, 6 and 7 Cai
Vietnam Lan ports (Quang Ninh), Thi Vai ODA port, Cai Mep ODA port (Ba Ria - Vung Tau) and An Thoi
wharf (Phu Quoc). Currently, there are 42 routes of public maritime routes into the national port with
Vu Minh Thai a total length of 935.9 km and 10 channels of specialized ports. The longest channel is Dinh An - Can
Ho Chi Minh city University of
Tho channel about 130.6 km, the shortest channel is 0.55km long, the channel to Sa Dec port, Dong
Transport, Ho Chi Minh city,
Vietnam
Thap province (from the confluence of Tien river). The channel for large tonnage vessels to enter the
Hau River (via Off channel) with a total length of 46.5km has been completed and put into operation
Nguyen Danh Chan to meet 10,000 DWT full-load ships and 20,000 DWT ships to reduce direct load to regional ports.
Ho Chi Minh city University of The Vietnamese seaport system basically satisfies the requirements of rotation of goods transported
Transport, Ho Chi Minh city, by sea, positively serving socio-economic development in coastal areas and the whole country.
Vietnam
Keywords: shipbuilding industry, opportunities, challengers

1. Introduction
Last time, sea transport has achieved quite impressive results. Regarding the volume of
containerized goods through the port, if in the first 6 months of 2017 only increased by 5%
compared to the same period in 2016, by the middle of 2018, this number has increased to
17% over the same period of the year. 2017. Cargo volume since 2016 has grown positively.
In particular, in the first 6 months of 2018, the growth rate reached 9%, this is a good
number, proving the role of the fleet began to promote efficiency. Therefore, the Vietnamese
fleet should prioritize the strength of traditional goods, bulk cargoes and capable transport
routes. Another highlight is the national one-stop shop mechanism in 9 port areas for
electronic procedures for Vietnamese vessels and foreign vessels to enter, exit and transit,
which are applied. Favorable conditions for shipping development. In order to exploit the
advantages and potentials, it is necessary to invest in expanding the infrastructure in order to
connect Vietnam's ports with neighboring countries, build transportation works, warehouses
and logistics centers on roads and corridors. connecting Vietnam's ports with Laos,
Cambodia, Thailand, South China ... and going to major ports in the world; improve shipping
capacity, increase cargo flow by sea; adjusting the planning of the seaport system towards
focusing on developing regional economic advantages; improve service quality of
Vietnamese fleets; focus on developing the capacity of transporting import and export goods,
transporting international goods, transporting the North-South coastal line, transporting
goods and passengers from the mainland to offshore islands. It is necessary to promote the
role of Vietnam's seaport system as the gateway to the East Sea of many ASEAN transport
Correspondence:
corridors, focusing on the ports: Vung Tau (Cai Mep - Thi Vai), Hai Phong (Lach Huyen),
Duong Le Hung Quang Ninh (Cái Lân), TP. Ho Chi Minh City, Da Nang, Quy Nhon, Nghi Son, Vung Ang;
Ho Chi Minh city University of developing fleets, seaport systems, shipping services synchronized with the seaport system,
Transport, Ho Chi Minh city, focusing on efficient exploitation of inland sea transport routes to reduce the load on roads,
Vietnam
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World Wide Journal of Multidisciplinary Research and Development

contributing to reducing costs, lifting High transport output. Tay Ninh are connected with inland waterways to support
In order to maximize the advantages of the location of Ho Chi Minh City ports. Ho Chi Minh City, Ba Ria - Vung
seaports, especially the international gateway port, to Tau; to promote investment in Bien Hoa - Vung Tau
attract large tonnage ships to transport import and export railway and Bien Hoa - Vung Tau expressway linking Cai
goods to long-distance shipping routes that need research, Mep - Thi Vai port; to upgrade inland ports in the Mekong
To develop and connect seaports, the system of post- Delta to ensure conditions for receiving container shipping
seaport support services with roads, railways, inland barges to create favorable conditions for connection
waterways, etc. between Cai Mep - Thi Vai port and cargo sources;
For the Northern region, focusing on completing the start- promote the effective implementation of the project of
up stage of Hai Phong international gateway port (Lach exploiting port group No. 5, which focuses on addressing
Huyen port) and investing in ports under the approved traffic congestion in Cat Lai area, studying solutions to
planning till 2020; deploying investment in logistics attract increasing cargo throughput.. After a long period of
services area after Lach Huyen port; developing inland crisis, Vietnam's shipbuilding industry is recovering.
ports to support seaports in goods production centers in However, there are still many difficulties and challenges as
Hanoi and Bac Ninh areas ..., inland container ports under the world's shipbuilding market has not really escaped from
transport corridors in the North to bring goods to and from it. "According to statistics, Vietnam has about 120
ports by Inland waterways and railways. For the Central shipyards, repairing ships with a tonnage of over 1,000
region, to promote research and investment in Lien Chieu tons, with 170 launching and launching works. Total
gateway port and road, railway connecting the East-West designed capacity of the plants is about 2.6 million tons per
economic corridor; to invest in building inland ports to year, but the actual capacity is only 800,000 - 1 million
support transportation to seaports in the Central region, tons per year. The Vietnamese shipbuilding industry has
especially in the Central Highlands region (Kon Tum, Gia been heavily invested since 2002 and is in the process of
Lai and border gates). For the Southern region, to focus on being transferred from major shipping hubs in Asia.
developing Cai Mep - Thi Vai international gateway port, Currently, in addition to Vinashin, which was established in
gradually forming an international transshipment port; to 2006 (now the Shipbuilding Industry Corporation - SBIC),
prioritize investment in upgrading and lowering the depth as the core, Vietnam's shipbuilding industry has shipyards
of Cai Mep - Thi Vai channel from the ports in Cai Mep owned by the Corporation. Vietnam Marine (Vinaline),
area to buoy "0" to an altitude of -15.5m with budget or Vietnam National Oil and Gas Group and other state
ODA capital; focus on investing in Cai Mep Ha logistics corporations and corporations, shipyards under
service area, focusing on building an inland port system in management of Ministry of National Defense, local
the city. Ho Chi Minh City, Dong Nai, Binh Duong and enterprises and FDI enterprises.

Fig.1: Vietnamese freight traffic

Along with the crisis of global shipbuilding industry, partners cancel the contract, the traditional customer is
Vietnam's shipbuilding industry has experienced some ups Vietnam National Shipping Lines (Vinalines) also halted
and downs over time. The breakdown of Vinashin has the project of packing tens of ships ... So far, with great
caused the shipbuilding industry, together with tens of support from the State, SBIC has been doing re work. The
thousands of workers, to fall into ruin when a series of structure and have escaped the risk of bankruptcy.
small and large shipyards in Vietnam were canceled, According to Ngo Tung Lam, Deputy General Director of
lacking jobs. Determining the importance of this industry, SBIC, some time ago, some shipbuilding projects including
the Government is determined to direct the restructuring of construction or re-launching of shipyards were restarted,
the shipbuilding industry vigorously. For Vinashin (now especially SBIC and its member companies. Copper
SBIC) from 2010 to 2015, it was the period the corporation, shipbuilding for overseas makes the hope of recovery more
they must focus on restructuring, handling bad debt. This fundamental. According to the SBIC leadership, in 2015,
period has encountered many difficulties due to foreign the whole company has deployed 254 products, including
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World Wide Journal of Multidisciplinary Research and Development

15 fishing vessels, 20 fishing vessels, 143 other products financial difficulties, not having enough resources to
and inland waterway vehicles ..., has delivered 178/254 upgrade their fleets, so it is difficult to compete with large
products Gross profit of the corporation is more than 1,000 fleets in the world. Vietnamese shipping enterprises also
billion VND. Although the shipbuilding market in the lack links with shippers and contracts with customers in a
country as well as the world is going through the quietest short time, so Vietnamese ship owners do not dare to invest
periods, the number of new shipbuilding and repairing is in building new ships without stable sources of goods. In
seriously reduced due to the impact of the world economy, the near future, the market for Vietnam's dry bulk shipping
but there are still many opportunities to accumulate. Pole enterprises (coal, stone, sand, steel, plaster, cement) will be
for Vietnam's shipbuilding market. With the available better when domestic thermal power plants are strong,
potentials and especially the policy from the government Construction market in Phu Quoc is promoted. For fleet
through the strategy of sustainable development of management and operation, Vinalines focuses on
Vietnam's marine economy to 2030, the vision to 2045 is restructuring the fleet, selling and liquidating old and
opening Vietnam many opportunities for market ineffective ships to create reciprocal capital to implement
development. Domestic as well as expanding cooperation modern and economical new ship investment projects. fuel,
with shipbuilding powers in the world. According to environmentally friendly, ... like the Ecoship generation
statistical reports, Vietnam currently has about 120 with the goal that by 2020, the fleet of Vinalines will have
shipbuilding and repairing factories with a tonnage of over an average age of about 14 years old with a container fleet
1,000 tons, with 170 lifting and lowering works. The total of around 13%, container ships liquid cargo accounts for
design capacity of the plants is about 2.6 million tons / about 9%, dry bulk and bulk cargo accounts for about 78%.
year, but the actual capacity is only 800,000 - 1 million In transporting goods, Vietnam is now focusing on
tons / year. Since 2002, Vietnam's shipbuilding industry developing dry ports as an "extended arm" of seaports.
has been investing heavily. However, it is only in the Continue to maintain a leading position in the domestic
process of receiving transfer from major shipbuilding shipping market; increase the capacity and market share of
centers in Asia. The overall picture of the shipbuilding transport between Vietnam and other countries and
industry is as follows: Vinashin, established in 2006, is international transportation in Southeast Asia and Northeast
now the Shipbuilding Industry Corporation - SBIC, which Asia; gradually expand to exploit markets in Europe,
plays a key role. Sadly, however, the collapse of Vinashin America, Africa and South Asia; participate in providing
has caused the shipbuilding industry and many of its services on ocean shipping and in global supply chains. By
workers or other shipyards to cancel applications and fall the end of 2014, the Government issued the Shipbuilding
into misery. Industry Development Action Plan on the basis of strategic
cooperation with Japan. With this plan, the Government is
2. Opportunities and challengers determined to achieve the goal of making shipbuilding a
The sea and ocean are of special socio-economic and key industry in the implementation of the Marine
political importance and a major development orientation Economics Strategy. Accordingly, it will focus on the
for countries around the world. Facing the geostrategic shift production of a number of products suitable to the
from the mainland to the sea space, many countries have development conditions of Vietnam and establish trust in
recently carried out their marine strategy planning due to the world market. Vietnam is a country with a high quality
their economic potential, national security and geopolitical shipbuilding industry. The increase in the output value of
status. Not outside the game, Vietnam determined that the whole industry reached 5-10% per year. It is no
shipping and shipbuilding industry will play an important coincidence that Vietnam's shipbuilding market has been
role in the strategy of developing marine economy and receiving the attention of many countries, shipping
ensuring security, defense and sovereignty over seas and companies, including major powers and shipbuilding
islands. corporations. Damen, a major Dutch shipbuilder, has
According to a report of the Ministry of Transport, as of the invested $ 60 million to build Damen - Cam River
end of 2018, Vietnam's fleet of ships had 1,593 ships, shipbuilding joint venture. According to JF Van Drenth,
ranked 4th in ASEAN (after Singapore, Indonesia, director of technical cooperation of the Damen Group, from
Malaysia) and 30th in the world. Our container fleet has 2003 to date, Damen has built more than 100 ship products
grown quite well (on average 20% / year) with the number of all kinds at the Cam River Shipyard in close cooperation
of ships increasing from 19 to 41. Vietnam's ship age has between the two. Sharp. With high skill and good
reached a younger age (14.7 years) than the world (20.8 management, Cam River Shipyard has fulfilled its
years) thanks to the increase in the number of new ships. In commitment to quality standards by Damen, ensuring the
2018, the total transport volume carried out by the progress and delivery time of the ship ... According to
Vietnamese fleet reached more than 144 million tons, an Damen representative, this company is in the process of
increase of nearly 11% compared to 2017, accounting for discussing the next investment at Ben Kien (Hai Phong) of
55.6% of the total turnover of goods of all directions. Mode Song Cam Shipyard.
of transport. In fact, the fleet only meets the demand for It can be said that shipbuilders in Southeast Asia face three
domestic transportation and in some countries in the region. challenges. Meanwhile, Vietnam's shipbuilding industry
With import and export transport, Vietnam has only suffered a blow in 2010 when collapsed with debt up to
accounted for less than 10% of export and import goods $4.5 billion. The goal of the Plan is to make shipbuilding a
volume, operating mainly on short transport routes to ports key industry in the implementation of the Marine
in Southeast Asia and Northeast Asia. World transport Economics Strategy; Focus on producing some products
trends in the current period towards containerization, but suitable to the development conditions of Vietnam;
Vietnam's container fleet is mostly small vessels. Not to Establishing trust in the world market for Vietnam is a
mention, Vietnamese shipping enterprises are facing country with a high quality shipbuilding industry. Some
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World Wide Journal of Multidisciplinary Research and Development

quantitative targets up to 2020: n The growth rate of output internal constraints, the construction capacity of Vietnam's
value of the whole industry: 5-10%; To set aside 70-80% of shipbuilding industry is currently only 30-40% of designed
production capacity for domestic demand for shipbuilding, capacity. Support industry is very important for
serving the economic, social, defense and security shipbuilding industry, but the pace of development of
development, except for some types of ships such as supporting industries is slow, investment has spread and the
submarines and cruisers, battleships, high technology and target of localization ratio has not been achieved. In terms
technical requirements; 3-10% for export; The number of of manpower, shipbuilders with international certificates
ships exported is expected to be 1.67 to 2.16 million tons are far less than required. In terms of design, according to
per year. The first challenge is lack of profitability. Many experts, the technical design stage only meets the
shipyards in the area are not profitable due to their requirements for small, popular vessels. Vietnam does not
extremely small production and poor management. PT PAL have an international standard model test tank to develop
of Indonesia is under contract because the Indonesian new designs, the entire technical design of the ships are still
government cannot commit to a long-term Navy purchased overseas. This is the weakest point of Vietnam's
modernization plan due to lack of funding. In 2009, PT shipbuilding industry today and will remain a weakness in
PAL was forced to start a production rationalization the future if there is no priority investment policy, training
process where nearly half of the company's 2,000 engineers design team. Many experts from countries with
employees were laid off. Meanwhile, Vietnam's large shipbuilding industries in the world such as Norway,
shipbuilding industry suffered a blow in 2010 when the Poland, Japan, South Korea ... stated that the world
Vinashin Industrial Group collapsed, with an estimated shipbuilding industry has not escaped the situation, at least
debt of $ 4.5 billion (currently the group is in the process of by 2014. Freight prices by sea decreased; reduced ship
Restructuring. Bridge). The second challenge is corruption. prices, the phenomenon of contract cancellation, time
In Malaysia, corruption in arms procurement has divert ship. The number of new shipbuilding orders,
undermined national naval shipbuilding efforts. The Kedah especially those of general use such as bulk carriers, oil
class patrol vessel program initially had the ambition of tankers, and container ships continue to decline;
producing 27 OPV offshore patrol vessels. However, this Shipbuilders face a very competitive situation, facing the
ambition has been hampered from the very beginning by pressures of restructuring and the changing environmental
the financial breaches leading to quality problems and time friendliness of world maritime conventions. The tendency
delays. The original contractor, the PSC Marine of the world market, with supply-demand imbalances, also
Shipbuilding Company, was found not paying some presents challenges, but also offers new opportunities for
subcontractors, while being involved in embezzlement of the shipbuilding industry. According to Andrew Westwood,
employees' retirements. As a result, the Malaysian vice president and director of business development for the
government requested the Boustead Shipyard to receive the Asia-Pacific region, the surplus will continue for another 3-
PSC and terminate the project. Even then the first ship in 4 years due to the volume of ships in some countries.
the shipment did not pass the trials on sea trials before overloaded (like China); Orders from Korea, China
delivery due to technical and quality problems. Finally, the continue to decline; Some countries continue to build ships
Navy's Kedah class shipbuilding program was forced to serving the domestic demand such as Brazil ... are no small
drop to six. The third challenge is the lack of advanced challenges to the development of the world shipbuilding
technology and expertise in shipbuilding. The technology industry, and Vietnam is no exception. Along with the
and technical capabilities of the shipyards in the area may rapid development of China over time, the growth of
be the biggest obstacle facing these shipyards. In most emerging economies in Asia has brought about the
cases, shipyards are small in size, limited to the emergence of middle classes in China, India, and elsewhere
construction of patrol boats, escort ships and coastal patrol pushing consumer demand - shipping, buying more goods.
vessels. Only Singapore is the exception when it is capable We need to monitor this development as it may be a
of building larger ships such as destroyers or amphibious condition for the emergence of bulk carriers, container
assault ships. Even so, all shipbuilding companies in the ships. Shipbuilders are also facing financial difficulties
region have to import all or almost all of the systems and when lending to banks for production is almost impossible.
weapons they equip, including machinery, radar, electrical Enterprises cannot borrow capital from banks. Shipbuilding
equipment, fire control, missile and naval guns. For these requires huge capital, so almost businesses have to
reasons, many regional shipyards want to cooperate with mobilize from ship owners, brothers, friends and suppliers
other countries to participate in larger and more complex of supplies. Although the current shipbuilding industry has
shipbuilding projects. However, the common problem is not completely overcome the difficult but latent challenges,
that local shipyards do not possess sufficient labor or there are also opportunities. This is the time for enterprises
production skills to participate in large projects. Therefore, operating in the shipbuilding industry to evaluate and
although there is potential, it is unlikely that Indonesia, perfect the organizational structure, strengthen the brand
Malaysia, Thailand, and Vietnam can surpass their present name, continue to maintain and aim for long-term and
status as small states in naval shipbuilding.Vietnam's sustainable development ", Deputy Minister Transportation
shipbuilding industry is facing with many difficulties and Nguyen Van Cong emphasized. On the other hand, with
constraints. First of all, according to information shared by increasing demand for energy, it will boost the shipping
Dam Dinh Vinh, specialist of the international shipping market and tankers in deeper, more remote areas.
brokerage Maersk Broker, shipbuilding market worldwide Specifically, the world's energy consumption will increase
is very fierce as demand for shipbuilding is decreasing. by 36% by 2035. Countries using coal and oil all increase
Prices in all segments of the ship are relatively low and (except for some OCD countries). Along with that, the
shipbuilders in general are competing fiercely in all areas renewable energy industry is also getting more and more
such as ship type, price, financial and service strategy. On interested ... All that shows both opportunities and
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World Wide Journal of Multidisciplinary Research and Development

challenges for the shipbuilding industry. It's not just the 4. http://baoquocte.vn/nganh-dong-tau-tai-cac-nuoc-
need for oil tankers in new oilfields, or the ships that can dong-nam-a-44800.html
run in cold regions, icebreakers ... but also fuel-efficient 5. http://business.gov.vn/tabid/96/catid/10/item/13737/k
and environmentally-friendly ships. The tanker market will %E1%BA%BF-ho%E1%BA%A1ch-hanh-
have a chance. With the cost of using oil more and more %C4%91%E1%BB%99ng-phat-tri%E1%BB%83n-
expensive, there are also oil tankers in new oilfields, which nganh-cong-nghi%E1%BB%87p-%C4%91ong-
are expected to increase from $ 150 billion to $ 170 billion tau.aspx
in the coming years. Along with that, there are three major 6. https://goldensealogistics.com/dinh-huong-phat-trien-
issues concerning for the shipping industry, everything is cang-bien-viet-nam.html
rising, shipowners are struggling and increasingly pressure 7. https://www.baogiaothong.vn/co-hoi-nao-cho-nganh-
on the environment. The solution is inevitably how to save dong-tau-viet-nam-d242608.html
energy, friendly environment. The experience of some of 8. https://bnews.vn/nganh-dong-tau-viet-nam-giai-phap-
the world's big shipbuilding companies shows that they use dat-chuan-made-in-vietnam-/52942.html
new energy such as solar, renewable energy to save fuel.
Designs need to focus on environmentally friendly
technology, energy efficiency.

3. Conclusion
Vietnam is a country with a long coastline, located on an
important maritime route linking the Pacific Ocean and the
Atlantic Ocean. At the same time, there is a favorable
natural geographic location to develop the marine
economy. In particular, the shipbuilding industry is a very
important part of the maritime economy, labor-intensive
and advanced technology applications. Therefore, it is
necessary to create favorable conditions for development,
especially with preferential policies for businesses,
domestic and foreign investors to do business. In 2018 and
2019, especially in 2020, a series of new conventions
applicable to ships will be stricter like the new regulations
of the International Maritime Organization (IMO) or the
European Council on supervision and reporting. And
verification of carbon dioxide (CO2) emissions from
shipping (hereinafter referred to as "EU MRV") strictly
regulates the ship's operating conditions for CO2 emission
reduction index, energy efficiency management, Water
ballast treatment. All of these new models have large
capacity, equipped with modern fishing facilities to
improve production efficiency. According to the
Shipbuilding Industry Corporation (SBIC), in 2017, the
value of shipbuilding field reached over VND 3,071 billion,
equal to 69% of the plan. Other areas increased
significantly, such as: Ship repair reached VND 488.3
billion, equal to 125% of the plan; ancillary industry
reached 264.5 billion dong, equaling 123% of the plan.
Although shipbuilding has not reached the plan, but
looking back on the period from 2008 to the present, this
field has always been in a state of turmoil and
bottomlessness due to lack of jobs, these are quite positive
numbers.

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