The Covid-19 outbreak since early 2020 has a bad effect on every aspect of life; especially the freight industry in Hai Phong, which was already going under since 2016.
A hot trend of buying container trucks
Hai Phong is an important province heading to the sea gateway of the North of Vietnam. It is also the biggest seaport system of the area, becoming the “capital” of the container freight enterprises. With 15,000 container trucks, Hai Phong is estimated to account for over 90% of the trucks in the North. They flocked to other areas from the seaports and inland waterway ports of the city.
Almost 10 years ago, every house in Hai Phong, even workers and sidewalk-tea owner, invested in buying trucks due to the high income from the business. The increasing number of trucks exceeds the demand of transportation while the scarcity of goods and the weak management capability made many of the container owners into “loan-owners”.
Mr. Nguyen Dinh Nam, a director of a transportation company, said that Hai Phong in 2012, had about 7,000 containers which consistently had a load from 50 tons to 100 tons of goods. Since 2013, when the government issued the Decree 171 (regulations on load control) on administrative sanctioning on roadway and railway, sanctions were tightened, almost no enterprises run an overload car. The cargo load per container was reduced into half or one third, causing the higher demand for trucks in the transport market. The transport companies would be reactive and just waited for people to approach them for shipments.
“Never had the transportation had it so easy as it was then. Containers were at their full capacity, and the charges definitely increased. Each truck after deducting costs, would bring a profit of 60 – 90 million per month and if well managed, it could be even more. The trend of buying a container truck was created then” said Mr. Nam.
According to Mr. Dang The Phuong, Vice President of Hai Phong Road Transport Association, in 2015 the number of container trucks in Hai Phong had doubled to 15,000 compared to 2013. Meanwhile, the volume of goods through Hai Phong port only increased 12% per year.
Although the price of tractor trailers made in America, Japan, Korea and China were marked up from 30% to 60%, they still ran out of stock. Buyers even had to pre-order a few months ahead for them at that time.
Wretch in the mass investment
Ms. Nguyen Thi Hanh, a sidewalk tea seller in Le Thanh Tong street (Hai Phong), said that in 2015 when many people came to the tea shop and talked about the profit of investing in container trucks, Hanh also collectively contributed a sum of 300 million dong with some friends to buy a truck to run.
In the beginning, it brought a return of 20 million each month to her, after deducting all the costs. But after that few months, everything had changed that she couldn’t earn from it anymore because the demand had decreased. In addition, she still has to pay the interest of the loan monthly, which caused difficulty to her and her partners. If they were to sell the truck, it would mean a complete loss.
The period of 2014 – 2016 marked the most drastic time of the battle against overloaded cars. With the Intersectoral Plan No. 12593 between the Ministry of Transport and the Ministry of Public Security of Vietnam, the load control is strictly implemented, the number of overloaded trucks are reduced by 92% compared to the period before 2014.
However, by the end of 2016, after the conclusion of the plan, the situation of overloaded transportation happened again, and this diminished the amount of cargo share of other trucks. Transport enterprises are facing a shortage of goods. Previously, the trucks could run continuously, but now the frequency is only 5-7 shipments per month, while the others remained unused.
Mr. Nguyen Hong Quang, the transport manager (Hai Phong Department of Transport) said: “In the last 4 years, several hundred enterprises, each year, have come to Hai Phong Department of Transport to register to return badges for container trucks. They felt that the operation is no longer effective, if continued, there will be no profits or even losses. So they gave back the badges and stopped driving so they do not have to incur the road maintenance fee”. But it was said that the real number is even more than that.
According to our statistics, of the 15,000 container trucks in Hai Phong, there are up to 3,000 trucks “lying under the mat”, the remaining 13,000 trucks run with only 50% – 60% of their capacity.
Lack of goods causes the fierce competition to the enterprises, not exception of unfair competitions. Now, they have to entreat favours of customers to obtain the job. Some of them even offer jobs without profits to keep customers. If the enterprise is reputable, the goods owners will consider working with them.
Translate & Edit: jina