LOGISTICS

In general, the shipping market in 2020 faced many challenges and difficulties due to the impact of the pandemic and the participation and sharing of market shares by some new carriers. In 2021, although the epidemic is expected to continue to have a major impact on the transport market, it is expected that the services will recover and grow again. On the basis of market prospects and the best efforts of the Company, Gemadept Shipping will continue to actively seek partners to cooperate, develop new services and routes; increase transportation activities, increase door-to-door cargo volume, domestic shipping...; structure the roots reasonably; control costs effectively; continue to strengthen Sales & Marketing activities; improve service quality to ensure the task of maintaining Gemadept's integrated service chain.

In 2020, Gemadept was proud to contribute to make the "Metro dream" of the Vietnamese come true when successfully transporting Metro No. 1 carriages to Ho Chi Minh City. To participate in transporting these Metro carriages, Gemadept's Project Team prepared a very thorough and professional overall and detailed plan. The transportation plan through 26 km of the crowded city area was carefully and detailed calculated by Gemadept, using modern equipment and skill of operating vehicles smoothly by the technical team to successfully transport the carriages, meeting the expectations of the City’s residents, agencies and departments.

Loc Ninh solar power project complex in Binh Phuoc province was completed on schedule as committed by the investor with Vietnamese Government, promptly completed and supplied power to the national power transmission network. In the general trend of the world to develop renewable energy, clean and green energy, preserve the environment and combat climate change, the Government has had policies to encourage wind energy development timely and effectively. The onshore wind power projects in Ninh Thuan, Binh Thuan or in the Central Highlands - Dak Lak, Gia Lai, Kon Tum, nearshore wind power projects in Ben Tre, Tra Vinh, Soc Trang, Bac Lieu, Ca Mau ... all receive attention not only from domestic investors but also foreign reputable investors to invest and simultaneously deploy in 2020 and the following years.

Gemadept provides all shipping agency services for passenger ships, cargo ships, LPG ships, oil ships, general cargo ships ... at Vietnamese ports. Besides, Gemadept Agency and Forwarding is a reliable partner of many international forwarder companies, providing air, sea and multimodal forwarding services…

In the past year, due to the pandemic the volume of bulk carriers and container ships has decreased significantly. Specifically, bulk carriers decreased by 50% and container ships by about 40%. Gemadept's Shipping Agency Department has actively served loyal and traditional customers well, and at the same time seized opportunities to approach new customers to develop services. Concerning results in 2020, the department served 375 ships (including 99 bulk carriers and 276 container ships) and other related services.

It is forecast that the market will be better in 2021 besides some outstanding difficulties. The newly established shipping agents will share the overall market, while many shipping lines will establish their own agents or merge together, etc. However, in the spirit of overcoming obstacles, Gemadept’s Shipping Agent Department will continue to provide the best of services, maintaining its role as a link in Gemadept's integrated Port - Logistics ecosystem, continuing to strive constantly to find more new customers, provide more services through proactively making suitable policies for each customer in the most flexible way.

Gemadept owns and operates 4 vessels, of which 2 vessels with an average age of about 12 years old. All vessels are equipped with good equipment, low fuel consumption, so they can meet the carrying capacity and are highly competitive. In 2020, although some shipping companies had to lay some vessels ashore to reduce the cost burden, Gemadept's fleet still ensured continuous operation, timely meeting the needs of transportation of the customers. In addition to the ocean-vessel fleet, the Company also owns the leading river ships and barges in the market, operating on domestic and Cambodian routes. Besides, in recent years, Gemadept has continuously invested and built new river ships to meet the needs of transporting cargo serving Gemalink deep-sea port. Specifically, by the end of 2020, the Company built 2 new river ships with the largest capacity in the market at present - 248 Teus, expected to be put into operation in the second quarter of 2021.

With the available management capabilities, experience and appropriate development orientations, along with the owning of the strong fleet of river and ocean vessels, Gemadept has always affirmed its position of sustainable development in the market. With the policy of saving costs but still ensuring the safety of the fleet, the ship management team always closely monitors each vessel/ship, continuously monitors each trip, each service, has prompt solutions in ship management, improving the sense of responsibility from office staff to each crew member. In that spirit, the results of ship management activities in 2020 basically completed the proposed plan of the Company.

On the basis of the key mission of Vietnam’s strategy for sustainable development of marine economy towards 2030, Gemadept has continuously have plans to improve the efficiency of management and operation of the Company’s ocean and river vessel fleet.

In 2020, SCSC celebrated its 10^th anniversary and 2^nd year of official listing on the Vietnamese stock market, attracting the attention and support of domestic and foreign investors.

In 2020, the epidemic situation influenced and reduced the volume of cargo transported by air. Particularly in the area of Tan Son Nhat airport, compared to 2019, the output of international cargo decreased by 12.8%, and domestic cargo decreased by 2.2%. Cargo volume decreased as the Government restricted passenger flights since the Covid-19 outbreak, especially international flights.

In that context, with a high effort, flexible response to the situation, good management of costs, SCSC has successfully accomplished its dual goal of ensuring safety in operation and completing business plans as committed to the General Meeting of Shareholders. This is a remarkable result of SCSC. SCSC's cargo throughput in 2020 reached 210,111 tons, down 3.8% compared to 2019, of which international decreased 7.1%, but domestic output increased 6.6%. Total net revenue exceeded 9.4% of the year plan. Profit before tax increased by 10.9% compared to the plan.

With the orientation of establishing a model air cargo terminal in Vietnam and the region, SCSC is always the first choice for air cargo service requirements in Vietnam. Entering the year 2021, SCSC continues to set growth targets, bringing added value to all parties, actively contributing to ensuring national aviation safety and security and promoting trade and economic growth of the country.

Overcoming these challenges, Mekong Logistics made a performance when successfully attracting the support of many new customers, while maintaining good relationships with existing customers. This was very important to Mekong Logistics to successfully complete the business plan and far exceeded the performance in 2019. Specifically, the revenue and profit before tax of Mekong Logistics in 2020 were 125% and 277% respectively compared with the previous year. These are very bright and encouraging results in the context of difficult and potentially risky general market.

Especially in 2020, Mekong Logistics, together with SCSC, implemented the Green energy project. The project was started construction on October 8, 2020 and was completed only after about 3 months on December 29, 2020. The project mobilized 7,500 people and a total of 4.8MWp and 10,880EA solar modules have been installed on the roof of the 25,000 square meter warehouse. Commercial solar power generation at the project commenced from the completion date. With the implementation of this project, Mekong Logistics is proud to be the cold warehouse with the largest solar panel installed in Southeast Asia. Not only does it provide immediate benefits that the company can reduce electricity costs by 25% per year, by taking advantage of the excess roof and using solar power, the rest of the unused power can be sold to EVN, to attract investment in solar panels but can also see indirect benefits when the sun does not shine directly on the roof to help reduce room temperature from 3 ~ 4 degrees. This also contributes to increase the competitiveness of Mekong Logistics in the market, enhance the image of an environmentally friendly business, in accordance with global climate change and capture the trend of energy sustainable development encouraged to use and promote by the Government.

2020 was the year when KGL operated quite smoothly with revenue growth of over 42% and profit more than doubled compared to 2019. In addition to traditional customers, KGL continued to serve new customers such as Morris Garage. In addition to conventional services such as storage, maintenance and repair, inspection of vehicles before delivery, KGL cooperated with PIP to promote customs clearance services, inspection, emissions inspection, car safety, tax refund service for customers, cooperated with Gemadept Logistics in transporting car components. In terms of costs, 2020 costs increased compared to 2019, proportional to revenue growth. KGL invested in more machinery and equipment, hired an external warehouse to serve customers during the peak season according to customers' requirements. In 2021, the market for imported cars is forecast to gradually overcome the challenges. Car companies also revealed that they would bring many new models to the Vietnamese market this year. These are good signs for KGL in particular and the Automotive Logistics industry in general. On that basis, KGL confidently sets growth targets for production and business activities during the year.