Saturday, August 25, 2007

Seaport development plan weighs anchor on growth

The domestic seaport system remains underdeveloped and under used, with many ports operating without necessary infrastructure, according to Government officials.

To improve profits in the marine sector, the Government has developed a seaport development plan that is expected to add substantially to economic growth.

Along Viet Nam’s 3,200 km coastline there are more than 100 seaports – 14 of which are crucial to the country’s economic development.

However, none of the domestic seaports can receive medium-sized vessels of 50,000 DWT (dead weight tonne) or 2000-TEU container unit, according to Ho Kim Lan, general secretary of the Viet Nam Seaports Association (VSA).

Experts say seaport development is ad hoc.

The northern region alone has Hai Phong port and Cai Lan deep water port, while two more ports – Lach Huyen and Hai Ha – are planned for Quang Ninh province. These last three ports will be within 100 kilometres of each other.

A similar situation is seen in the central region, which in the 1990s had just two ports – Da Nang and Quy Nhon. Now, however, there is Nhon Hoi port, which is close to Quy Nhon and just 200 km from Dung Quat, which is under construction.

Meanwhile, Chu Lai Open Economic Zone has the Ky Ha deepwater port. Da Nang has the Tien Sa deep water port and Thua Thien-Hue province the Chan May deepwater port.

Due to the density of seaports and the limited supply of goods, most do not run at full capacity, resulting in significant losses.

Experts also blame poor design and a lack of accountability for the industry’s inefficiency.

Cai Lan port in Quang Ninh province, for instance was originally planned to welcome 50,000-tonne ships and 3,000 TEUs but is only able to serve ships of 10,000-20,000 DWT.

Cai Lan Port Deputy Director Nguyen Quang Dao said: “Although the water line at the Cai Lan Port is at a level that allows the entry of 50,000-tonne ships, the depth of passage to the berth is capable of handling vessels less than 25,000 tonnes. Others have to dock at distant trans-shipment points.”

“Trans-shipment costs 7 USD for each tonne of goods, resulting in a loss of hundreds of billions of dong after three years of putting the port into operation,” Dao said.

Dredging the Cai Lan port’s 7.5 km passage will cost up to 300 billion VND (18.8 million USD), he said.

There are similar problems at Cai Cui port in Can Tho City and the Dinh Vu port in Hai Phong.

The limited size and shortage of infrastructure at seaports means that goods travelling from Viet Nam to major international markets such as the US and the EU have to be trans-shipped to larger ports, such as Hong Kong and Singapore. The additional handling costs offset Viet Nam’s lower labour costs.

A 40-foot container carrying cargo to Los Angeles from Hong Kong for example costs 28 percent less than when it is shipped from HCM City.

According to general director of Viet Nam National Shipping Lines (Vinalines) Mai Van Phuc, around 80 percent of the domestic marine transport market is conducted by foreign merchant shipping.

This also affects supplies of logistics-related services, which could theoretically create profits worth dozens of billion of US dollars a year, Phuc said at a recent seminar.

“Viet Nam alone each year has to spend about 8 –11 billion USD for logistics services, nearly 60 percent of which is for marine transport-related services,” he said.

Nguyen Ngoc Hue, deputy director of the Viet Nam National Maritime Department, said: “The most effective way to avoid the scattered investment situation is to have a professional seaport development scheme that has a strategic vision of some dozens of years ahead. Seaport planning must include details for the rear of ports, and must have transparent feasibility.”

Nguyen Van Tiem, the former director of the Viet Nam Ocean Shipping Company (Vosco), said the marine transport industry must go public, and that State companies should be equitised.

Domestic enterprises involved in marine transport should join forces with each other to better compete with foreign rivals, Tiem added.