APL urges Vietnamese ports investment

Vietnam must better co-ordinate the planning and construction of an integrated seaport network to handle the country's rapid trade growth, according to container transportation leader APL.

The company was providing an update of the findings outlined in a research paper focussed on Vietnamese transportation and logistics, developed by NOL Group, the Singapore-based parent company of APL.

"Vietnam's cargo growth potential is tremendous. Average historical growth of containerised cargo of 20% could rise to 25% per year. Previous government forecasts have underestimated actual growth of container volumes, which could have a severe impact on the future planning of cargo transportation infrastructure," said Jim McAdam, APL's president for the Asia Middle East region.

Speaking from Hanoi, McAdam asserted that the development of world-class seaports would be a crucial factor in enabling Vietnam to cope with future trade growth. "New port developments must be focused around the key cargo carrying origins of Ho Chi Minh City in the south and Haiphong in the north of the country," said McAdam.

Vietnam's main commercial artery of Ho Chi Minh City, which accounts for more than 70% of Vietnam's container throughput, is facing the most serious challenges. Existing port and landside infrastructure is at near to full capacity and several planned new facilities will not be operational for several years.

"Congestion is a real problem in Ho Chi Minh City. There may be some relief once the first phase of new capacity comes on stream in 2009. However, if demand growth exceeds 25%, we will likely have serious under-capacity in the years ahead. The infrastructure master plan should cater not only to new port developments but also landside requirements," added McAdam.

Ports in north Vietnam are facing similar infrastructure constraints. Haiphong port, which currently handles around 22% of Vietnam's container throughput is recording growth in containerised traffic in excess of 25% per year. The NOL Group report suggests there is a need for an additional 1 million twenty-foot equivalent units (TEU) of capacity to 2010, with demand expected to increase to 2 million TEU.

"Although more than US$4.5 billion has been earmarked for new port investments over the next five years, this must be matched by a similar amount to upgrade land transportation facilities in Vietnam," said McAdam. The southeast Asian country has emerged as one of the world's fastest growing sourcing and manufacturing locations for a range of commodities such as furniture, apparel, seafood, electronics and seafood.

NOL Group is a major investor in the Vietnam International Container Terminal (VICT), which became the country's first purpose-built container handling facility in 1998. Recently announced expansion plans for VICT will increase the berth length by 192 metres and annual capacity will rise to 900,000 TEU.

With ports in Vietnam currently only able to handle relatively small vessels of between 20,000 to 30,000 deadweight tons (DWT), the need for new deepwater ports is critical to address the growing demand in the country. While the seaport master plan calls for the construction of several new deepwater ports in the country, many of these developments could be delayed due to uncoordinated planning and poor infrastructure. This is despite the interest shown by many international port operators in Vietnam.

Foreign investment and know-how must be matched by a commitment to improve cargo handling and landside facilities, logistics services, and professional skills in the shipping, ports and logistics arena.

"If this doesn't happen, shipper, carriers, terminals and all other stakeholders in Vietnam's supply chain will potentially suffer, and production and sourcing could shift to other Asian origins," warned Mr McAdam.

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