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Vietnamese port infrastructure needs to keep pace with growth

Thursday, 24 October 2019 | 00:00

The Vietnamese port industry needs further investment to keep pace with the country’s rapid economic growth and reduce logistic costs for businesses.

After two plans (in 1999 and 2009) and one adjustment (in 2014), to date, Vietnam has 45 seaports with total capacity of more than 550 million tonnes per year. Major ports are concentrated in northern Hai Phong city, Danang and Quy Nhon in the central region and Ho Chi Minh City in the south.

However, Vietnam has many smaller ports, which takes the total number in the country to 320.

In the last 10 years, rapid economic expansion in Vietnam has driven up shipping demand, highlighting the importance of ports. Vietnam’s container traffic through the seaport system has risen 10-12 per cent per year, far exceeding the average growth of three per cent of the global port industry in the last decade.

Vietnam Maritime Administration deputy director Bui Thien Thu said most of the regional major ports have been upgraded to accommodate vessels with capacity of up to 30,000 deadweight tonnage (DWT).

Cai Mep-Thi Vai Port, a deep-water port located around 80km south of Ho Chi Minh City, can handle vessels with capacity of 18,000 20-foot equivalent units, or 194,000 DWT. This port handles goods for Dong Nai and Binh Duong provinces, which are major manufacturing hubs in the South, and is popular on routes to the US and EU thanks to its deep-water capabilities.

However, the market share of throughput among ports is uneven, Thu said, emphasising that 90 per cent of the country’s total freight is going through the two port groups in Hai Phong and Ho Chi Minh cities.

The network of ports in Ho Chi Minh City handles about 55-60 per cent of the total throughput nationwide while the northern ports account for 25-30 per cent. The city’s Cat Lai Port is also ranked among the top 25 biggest container ports in the world and the fifth biggest in Asean.

Container goods through the central ports account for just over 10 per cent.

This implies that northern and central ports are operating below capacity while the southern ports are over-burdened with shipments, which has led to congestion and significant delays, Thu said.

According to the World Economic Forum’s global competitiveness report 2019, Vietnam ranks 83rd among 138 economies on the quality of port infrastructure, with an average score of 3.80 on a scale of 1 (lowest) to 7 (highest).

The Vietnam Port Association (VPA) stated that 80 per cent of container exports and imports go through smaller ports and ships, a process known as transhipment, which leads to delays and increases costs by around 30 per cent.

Poor transport infrastructure

Tran Dinh Thien, former director of the Vietnam Economic Institute, said the overloading at seaports was also the result of poor transport infrastructure.

Road and rail infrastructure has not been able to keep up with economic growth. The railway and road network around ports remains underdeveloped and lacks connection with various ports.

For example, belt roads around Ho Chi Minh City’s ports are either too far or undeveloped which has led to poor connection between the ports and the key economic regions and the international transhipment to the key economic region is limited, Thien said.

“The investment in Dinh Vu Port in the North is a crucial factor to spur the development of industrial clusters,” Thien was quoted as saying on haiquanonline.vn.

He said to go to Hai Phong, most cars currently travel on National Highway 5B while long and heavy trucks choose to go on the old, small National Highway 5 with slow speeds, as most industrial parks are located along this way.

Thien said the government needs to have a new approach for planning seaport infrastructure to keep pace with the nation’s economic development.

In fact, the Vietnamese government has introduced a master plan related to the development of the seaport system by next year and 2030. It has targeted to achieve a cargo clearance target of at least one billion tonnes by next year and 1.2 to 1.6 billion tonnes by 2030.

According to the master plan, many deep-sea ports are being invested in all three regions such as Lach Huyen Port in Hai Phong, Lien Chieu in Danang city, Tran De in Soc Trang province and Hon Khoai in Ca Mau province with investment capital of trillions of dong.

Given the currently limited state budget, Thien said the government needs to consider public-private partnerships and encourage initiatives to develop the private sector.

Vietnam Seaport Association secretary-general Ho Kim Lan also pointed out a weakness in Vietnam’s seaport system which is the lack of updated logistics technology.

Cat Lai Port is the only port that currently applies “electronic port” (ePort) to handle procedures and online payments for all container forwarding options.

As well as investing in increasing port capacity, Vietnam also needs to invest in modern equipment to increase productivity, apply one-stop service for customers and enhance connectivity with international maritime routes, Lan said.
Source: Viet Nam News

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