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Vietnamese port infrastructure needed to keep pace with growth

Thứ Bảy, 02/11/2019 - 18:30

The Vietnamese government needs to have further investment and a new approach for planning seaport infrastructure to keep pace with the country’s rapid economic development and reduce logistic costs for businesses.

Containers at Cat Lai Port. Cat Lai Port in HCM City is also ranked among the top 25 biggest container ports in the world and the fifth biggest in ASEAN. (Photo tancang-stc.vn)

Experts have urged competent authorities to remove bottlenecks remained in the Vietnamese port infrastructure system for it to keep pace with the country’s rapid economic growth and cut logistic costs for businesses.

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

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

In the last 10 years, rapid economic expansion in Viet Nam has driven up shipping demand, highlighting the importance of ports. Viet Nam’s container traffic through the seaport system has risen 10-12 per cent per year, far exceeding the average growth of 3 per cent of the global port industry in the last decade.

According to Bui Thien Thu, deputy director of the Vietnam Maritime Administration, most of the country’s major ports have been upgraded to accommodate vessels with capacity of up to 30,000 deadweight tonnage (DWT). However, the market share of throughput among ports is uneven.

Cai Mep-Thi Vai Port (CM-TV), a deep-water port located around 80km south of HCM City, can handle vessels with capacity of 18,000 20-foot equivalent units (TEUs), 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 HCM cities.

While the network of ports in Ho Chi Minh City handles about 55-60% of the total throughput nationwide, the northern and central ports account for only 25% and 10%, respectively.

Cat Lai Port in HCM City 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, Viet Nam 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 Viet Nam Port Association (VPA) stated that 80 per cent of container exports and imports go through smaller ports and ships, a process known as trans-shipment, which leads to delays and increases costs by around 30 per cent.

Besides, Tran Dinh Thien, former director of the Vietnam Economic Institute, said that the overloading at seaports is also the result of poor transport infrastructure. Thien explained that the railway and road network around ports remains underdeveloped and lacks connection with various ports, and therefore has failed to keep up with the country’s economic growth.

For example, belt roads around HCM 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 trans-shipment 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 5B highway 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.

The investment in Dinh Vu Port is important to spur the growth of industrial clusters.

New planning needed

According to Thien, 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 2020 and 2030. It has targeted to achieve a cargo clearance target of at least one billion tonnes by 2020 and 1.2 to 1.6 billion tonnes by 2030.

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

Given the current state budget constraint, Thien said the government needs to consider public-private partnership financing mechanism and encourage initiatives to develop the private sector.

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

Cat Lai Port is the only one that currently applies "electronic port" (ePort) to handle procedures and online payments for all container forwarding options, Lan said.

As well as investing in increasing port capacity, Vietnam also needs to invest in modern equipment to increase productivity, aggressively apply one-stop shop mechanism and enhance connectivity with international maritime routes as the country’s seaport system lacks updated logistics technology.

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).

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