VN’s freight transport volume beats with growing trade links

Freight transport volumes by air, rail, and road are expected to increase in line with Việt Nam’s growing trade ties

The country's growing recognition as a region trade hub has attracted foreign freight transport operators to the market and in June, Damco, the logistics division of Denmark-based shipping group AP Moller Maersk, announced the introduction of a new cross-border trucking service linking Việt Nam with Thailand and Cambodia. Damco has been building its presence in the South-East Asian market, and in 2009 opened a new transportation hub in Thailand's Samrong district.

Việt Nam’s favorable demographics have caught the attention of China, Japan and other major Asian exporters who are looking increasingly to their own backyards for growth opportunities. China, in particular, is keen to foster ties with its neighbors, and this year signed a free trade agreement (FTA) with the ASEAN-5 (Malaysia, Singapore, the Philippines, Thailand and Indonesia) and Brunei, creating the world's third-largest trade bloc. The agreement eliminates tariffs on 90% of goods traded between the countries and China. Four other states, Laos, Cambodia, Việt Nam and Myanmar, are on course to merge with the bloc in 2015.

Việt Nam's ability to capitalize on new trade opportunities will depend on the provision of new freight transport infrastructure. The Government is securing investment to help develop the country's transport network with roads one of the main areas targeted.

In June, Việt Nam opened a newly constructed bridge, which will provide connection between the Cát Lái Port and Hà Nội Highway in Hồ Chí Minh City's District 2. The construction work of the three-lane bridge got completed three months ahead of schedule. The bridge is 413.7m long and 12.5m wide and is part of a city project to broaden interprovincial Road 25B that connects the bridge to the port.

In 2011, said Fast Market Research’s report, Việt Nam see continued growth in freight carried by road with volumes carried rising by 6.62% to 28.62 billion ton-km (bntkm) following this year's expected 4.8% increase.

The expansion of Việt Nam's rail freight sector is expected to continue, despite the recent decision of the Vietnamese National Assembly not to endorse the plan for the construction of a north-south high-speed railway. In 2011, rail freight volumes, forecast to enjoy a partial recovery of 3.3% in 2010, are expected to grow at an accelerated rate, increasing by 4.6% to 4.09 bntkm.

Airfreight volumes should follow a similar pattern, growing by 4.7% in 2011 to 294.03bntkm following on from a predicted 3.3% increase in volumes this year.

Aside from of the much-publicized travails of Việt Nam's national shipbuilding company Vinashin, Việt Nam's maritime sector should continue on the upward trend established in 2010. The country's largest port Sài Gòn New Port (SNP) is expected to experience a 7.5% growth in throughput in 2011 when it will handle 21.84mn tons. This is a slight gain on this year's growth rate when we expect the facility to be handling 20.33mn tons - a year-on-year increase of 6.2%.

The Port of Đà Nẵng (PDN), a smaller facility in central Việt Nam, growth is expected to continue to post weaker growth than SNP, with tonnage volumes forecast to increase by 2.8% y-o-y to 2.69mn tons. This year the port is expected to report growth of 2.3%.

In recent years, Việt Nam has enjoyed strong export-led growth but as the internal market gathers pace overall trade growth is expected to ease down. In real terms, exports and imports combined were growing at more than 20% per annum earlier this decade, but in the global downturn of 2009 they contracted by 14.5%. In 2011, total trade may grow by 6.2% year-on-year in real term, building on this year's projected 5.4% increase. Imports are expected to grow by 6% with exports increasing by 6.5%.

By Hải Minh