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An amendment of port services charges: Need a planning process and fit with the demands of development

(VLR) Currently, the cost of port services in Vietnam is now much lower than that in other countries in the region. According to Vietnam Logistics Business Association (VLA), the amendment in increasing the service price of container loading; revising and supplementing the cost norm for maritime pilotage, usage of berths, buoys, anchors and towing services in the Circular Draft for amending and adjusting some articles in the Circular no. 54/2018 is very significant.

An amendment of port services charges need a planning process and fit with the demands of development

An amendment of port services charges need a planning process and fit with the demands of development

Handling charges are still unreasonable

In the market now, nearly 100% import-exported cargoes that coming in and out of Vietnam in container ships are carried by foreign ship lines. Hence, these lines are hosts providing the deliver services of Vietnam’s import-export cargoes by sea. They have been collecting many unreasonable charges and surcharges from Vietnam’s import-export customers, including loading and unloading costs that ship lines need to pay to seaports.

According to Decree no.146/2016/NĐ-CP dated November 02, 2016 regulating on publishing of freights and surcharges of ocean container shipping and seaport charges, in case of adjusting in listed freights or surcharges, the ship firms only need to list the amended fees at least 15 days before applying without any required inspection or explanation for the charges and surcharges elements. Due to the lack of strict management in charges, since 2009, many ship lines have applied the charges and surcharges with a steady increase over year, regardless the loading and unloading costs at seaports. Besides, currently, many foreign ship lines who only have fixed routes and schedules (market liners) and already signed the contract paying loading charges for seaports apply the THC (Terminal Handling Charges, an additional cost among many types of surcharges) at the level of $114 USD/TEU (20’), depending on policies of the ship lines.

At Vietnam’s seaports, due to the competition in costs instead of service quality in accordanced with the floor prices regulated in the Circular no.54/2018, most of the ship lines are trying to attract the foreign ship firms at the floor prices, hence many foreign ship lines have been paying the handling costs at rate of $33 USD/TEU in Dinh Vu area, $52 USD/ TEU in Cai Mep and $41 USD/TEU in HCM City.

Therefore, if still applying the floor prices as regulated, there will have a signification difference ($68 – $87 USD) between THC collected by ship lines and loading/unloading costs that ship lines paid to the seaports. With over 10 million TEU of import-export cargoes broking through Vietnam’s seaports each year, the ship lines can get a huge benefit from the difference in handling charges. In long term, this will lead to a rise of logistics service costs in Vietnam. Vietnamese enterprises (including import-export enterprises and seaports) are all suffering this severe disadvantage.

In regards of the port handling cost, it has seen a decrease over the last time and was not considered properly. For example, according to Decision no. 85/2000/QD-BVGCP dated Oct 11th, 2000 of the Government Pricing Commission or Decision no. 61/2003/QD-BTC dated Apr 25th 2003 of the Ministry of Finance regulating the cost norms of maritime charges and surcharges and seaport services, quotation for handling service is $57 - $85 USD/container for the 20’ and 40’ type at the Area 1 and 3. After 20 years, according to Circular no. 54/2018, these two types at the Area 1 and 3 have been reduced significantly, only $33 USD/20’ at Area 1, $41 USD/20’ at Area 2 and $52 USD/20’ at Cai Mep.

COVID-19 epidemic has been going complicatedly and put the tremendous impacts on all enterprises in general, especially enterprises operating in supporting services for import-export like logistics, sea transport and port services. Hence, it is neccessary to consider the benefits for all enterprises, but most importantly, for protecting the rights and legitimate interests of the country in order to issue the realistic handling rates.

Amending the service prices following a planning process and match with the reality

VLA stated that increasing the container loading charges; revising and supplementing the cost norm of maritime pilotage service, an usage of berths, buoys and towing services in the Circular Draft, that adjusting and adding some articles of the Cicular no.54/2014 is very necessary. However, this amendment should avoid an increase in the national logistics services. Many foreign ship lines that have been collecting high THC just pay very low handling fees to the ports, just about 30% - 45% of their collecting fees. Therefore, when adjusting the loading costs, it is proposed that government agencies/ departments operating in cost- price and sea transport should enhance the management applying on foreign ship lines to stop increasing THC and other surcharges, presenting for an important role of the government management in reducing national logistics costs.

The general seaport costs and the particular port handling rates have to ensure the investment efficiency of the port enterprises and the legitimate benefits of the country in business operation

The general seaport costs and the particular port handling rates have to ensure the investment efficiency of the port enterprises and the legitimate benefits of the country in business operation

The general seaport costs and the particular port handling rates have to ensure the investment efficiency of the port enterprises and the legitimate benefits of the country in business operation. Currently, the usage capacity of Vietnam’s seaports has grown fast, especially in Cai Mep area, thanking for the trend increasing the ship sizes. Hence, Government should have the reasonable price policy that fit with the innovation level and investment scale of deep waterports, then port enterprises can boldly invest, promote the competitive capacity and the service quality.

The amending of port handling charges in Vietnam needs to study further through the planning process to avoid any impedes on the activities of import-export enterprises, logistics suppliers and ship lines, especially while the COVID-19 epidemic is still very complicated. Based on VLA, early in 2021, when COVID-19 pandemic minimizes its effects is the right time for a start of amending process.

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