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Vietnam Freight Transport Report Q3 2011
Business Monitor International, May 2011, Pages: 50
The Vietnam Freight Transport Report provides industry professionals and strategists, corporate analysts, freight transportation associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Vietnam's freight transportation industry.
This report maintains a forecast of a good year for Vietnamese freight transport in 2011. The overall view has two major components: a background of high single-digit growth of the economy on the one hand (albeit at a slower rate than in 2010) and some disparities in the pace of expansion of freight capacity by transport mode on the other. While investment is being channelled into ports and container terminals, for example, officials admit that the rail freight sector is plagued by insufficient track and signalling.
As far as the economy is concerned, the authorities are acting to cool down the pace of growth so as to be able to control inflationary pressures and narrow the foreign trade deficit. While this is forcing a cut-back in some public sector investment projects and therefore slower growth, BMI believes that a short term correction is necessary, and will ultimately be a positive factor on the medium to longer term.
As far as the freight industry is concerned, it is important to note that it is only in the ports and shipping and road haulage sectors that freight tonnage will expand at a faster-than-GDP rate this year. Road haulage will be ahead of GDP by only 0.2 of a percentage point (6.5% vs 6.3%) while the ports sector will be ahead only in some terminals (eg. Saigon New Port). Volume growth across all other transport modes will lag behind GDP: airfreight (+5.3%), followed by rail (+4.8%) and inland waterways (+4.3%)
Headline Industry Data:
- The real value of total trade will rise by 11.3% this year, with exports gaining 11.0%, behind import growth of 11.6%
- Total volume handled at SNP (Saigon New Port, also known as Port of Ho Chi Minh City) will rise 7.5% to 21.843mn tonnes this year, while volume at the PDN (Port of Da Nang) will rise 2.8% to 3.29mn tonnes.
- Airfreight will grow by 5.3% this year to 147,910 tonnes.
Key Industry Trends:
Jade Cargo Opens Hanoi Route
Netherlands-based Jade Cargo has launched twice-weekly freighter flights to Hanoi via Shanghai, India and Dubai. Executives say they are building the company's Asian network and are encouraged by Vietnamese airfreight exports, particularly in the high-tech sector.
Movement on Long Thanh International Airport
The plan to build a new airport - the country's largest - at Long Thanh has been stuck in the pipeline for years, but now the authorities say work on the US$1.27bn project will start in 2015.
Japanese Interest in Vietnam Ports Surges
The Japanese government, investors, contractors, and shipping lines are all looking to get involved in the Vietnamese ports and shipping sector. JICA (Japan International Cooperation Agency) is funding the bulk of a JPY140bn (US$1.7bn) new port project at Lach Hyuen in northern Vietnam. Shipping lines MOL and NYK are opening new services to the country. Japan's Kobe Steel says it will build its own US$244- 365mn port there to secure iron nugget supplies.
Key Risks To Outlook:
The main risk to the report’s freight transport projections is that this year's macro-economic slowdown might be more severe than expected. A potential scenario in which this could happen would be if both domestic inflation and the foreign trade deficit remain much higher than desired, and show no signs of responding to the tightening measures already taken. The authorities could then find themselves forced to take more severe measures, with a consequent negative impact on GDP growth and demand for shipping services.
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