Major global operators are investing in facilities as the country’s box market posts a 17% rise in volumes for 2010
VIETNAM’S government has reacted decisively in dealing with economic overheating and high inflation levels of 11.75% last year and possibly 18% in 2011.
The dong was devalued by 9.3% against the US dollar in February this year — it is worth about Dong20,500 to the dollar — and the government’s Resolution 11 approved in the same month contains “a wide range of bold, mutually reinforcing and consistent monetary and fiscal policy targets”, according to a World Bank report on the southeast Asian country in June.
Despite “initial scepticism”, the World Bank reports that the government’s measures have started to show results towards regaining macroeconomic stability in Vietnam, which has a population of 87m.
But with growth in gross domestic product of around 6.8% last year and a range of 6.3% to 7.5% forecast for 2011, it is no wonder that the major global port operators are investing in facilities for a nation that has an interesting, if unbalanced, mix of transpacific, European and intra-Asia container trades.
Vietnam’s total container market last year saw estimated volumes of 6.6m teu, or growth of around 17%.
Southern Vietnam, where traditionally apparel and footwear production takes place for exports, is served for the container trades by the Ho Chi Minh City and the Cai Mep terminal clusters at the foot of the country, which is shaped rather like a semi-colon and brushes China, Laos and Cambodia.
HCMC and the more southerly Cai Mep together account for around 70% of total Vietnamese box volumes, standing just short of 4.4m teu in 2010, an estimated 19% year on year surge, with a 12% spurt in the first quarter of 2011.
Maersk’s global container ports arm APM Terminals is a partner in Cai Mep International Terminal Co, one of a series of box terminal operations in the Cai Mep area.
The head of commercial with CMIT is Malcolm Gregory, who was in London to provide an update.
He said: “Dredging was completed by the end of the third quarter 2010 and we now have access to 14 m and 12 m of water depending on where you are in Cai Mep. It has been certificated and the new charts issued, giving us the ability to handle direct European services to start. That was the big change.”
The channel was deepened from 9.2 m to 12 m and 14 m. There is not a silting problem and so permanent redredging will not be an issue. The official plan is for a depth of between 14 m and 16 m by 2020.
The Cai Mep box terminal cluster now has at least 14 direct services, split evenly between Asia-Europe and transpacific, served by a range of vessels between 5,000 teu and 11,500 teu, the latter being CMA CGM ships calling at CMIT.
The Cai Mep terminal cluster handles around 12,000 moves per week, or the equivalent of 20,000 teu, said Mr Gregory. This group of terminals account for 20%-25% of the southern Vietnam container throughputs, with the rest still moving through the HCMC ports.
The HCMC terminal cluster, with a 9.5 m approach depth, benefits from the large intra-Asia volumes served by small vessels.
CMIT, said Mr Gregory, now has three mainline services from the Grand Alliance and a weekly feeder call: “We are licensed for 160,000 dwt, which is the same size as an Emma Maersk size vessel, but it would be tide bound if full of containers.”
Most mainline vessels will be full because they have called at China before reaching Cai Mep, hence the current deepening of the CMIT berth pocket to 16.5 m.
Mr Gregory said that Vietnam is fairly well balanced trade in terms of containers, but added: “The problem is that most imports are intra-Asia and most exports are long haul, so the carriers with the best balance are those involved in both trades. Maersk Line would be a fairly good example of that.
“Today, most of the direct calls in Cai Mep are export related and have very little imports, because they still go up to the old city terminals on smaller ships.”
He believes that it will be a long time before import volumes start appearing at Cai Mep: “Most intra-Asia vessels are still less than 2,000 teu capacity, with the exception of the longer haul intra-Asian ships — India to China — which are edging up to panamax size.”
There are two big players yet to serve the Cai Mep cluster with direct calls, opting instead for feeders: Geneva-headquartered Mediterranean Shipping Co and Taiwan’s Evergreen.
Said Mr Gregory: “We are talking to both them. It is not a question of if, it is a question of when they will call with direct services.”
Vietnam industry observers believe it inconceivable that MSC, with its strong European focus, will hold off for too long.
Vietnamese terminals have relatively low handling costs, which makes them attractive for direct calls. In doing so, lines cut out the feeder costs, although smaller vessels are less tide restricted, which may be an issue for main line vessels in a tight sailing schedule.
Another big driver is that some lines are focused on containerised goods sold on Cost, Insurance and Freight terms, ie sold to forwarders and shippers in Vietnam rather than to the consignees in Europe and North America.
One industry observer, who asked not to be named, said: “Most shippers like the flexibility of being able to deliver a container whenever they like for a feeder vessel. They do not have to worry about 24-hour rules and documentation in advance of the container.”
Such shipping lines with CIF volumes will continue to use the older terminals in the HCMC area with smaller ships.
Meanwhile, the Cai Mep cluster continues to benefit from government improvements to local infrastructure, such as road links. CMIT now has a two-lane paved road to the terminal, and work on making it four lanes is about to start.
Mr Gregory said: “It used to take 35 minutes on a dirt road to cover 9 km and now it is taking just five minutes.”
The terminal link road feeds into Highway 51, which goes up to Hanoi. This northern section is being widened and should be complete by the year end.
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