Vietnam Freight Transport Report Q3 2009

According to the Saigon Times Daily, Deputy Director Duong Van Hoa said that Vietnam National Coal- Mineral Industries Group (Vinacomin) would build a US$250mn deepwater port at Khe Ga Cape, in Binh Thuan province. Khe Ga Seaport will be utilised to import coal, and export aluminium and minerals. The port will be able to handle ships up to 80,000 deadweight tonnes (DWT). The Ministry of Transport's Vinamarine International Co-operation Department has stressed that the investments necessary in Vietnam's port sector are considerable if the sector is to keep up with the wider economy. The key for Vietnam is to sustain investor interest in the sector. Thus far, there has been little evidence that investors have lost interest in Vietnam's infrastructure sector.

Taking this and other developments such as the downturn in the global economy into consideration, BMI's newly released Vietnam Freight Transport Report concludes that shipping traffic will increase by an annual average of 6.7% in 2009-2013, measured in tonnes per km. A number of factors underpin this forecast. One is the still-realistic prospect of a long, export-led boom in Vietnam, with annual GDP growth likely to average 6.1% in 2009-2013, only a little slower than the 7.8% rate achieved in the preceding five-year period. Infrastructure plans are also ambitious, with many new ports under development.

Our overall outlook for the nascent freight transport industry across the different modes is bullish despite the recession. Although the next two years will be tough, air freight will grow by an annual average of 7.6% over the next five years. In road haulage, we have trimmed our forecast to take account of the economic slowdown, but we still see turnover running ahead of the general rate of economic expansion in Vietnam. We see road freight growing by an annual average of 7.5% over the next five years, followed closely by pipeline throughput (7.0%), maritime freight (6.7%, as already mentioned) and rail (6.6%).

Full World Trade Organization (WTO) membership, achieved in early 2007, can be seen as supportive of greater freight transport turnover relative to GDP across all modes, particularly so for shipping. We now expect total freight carried growth across all modes, measured in million tonne-km (mntkm), to average 6.8% per annum in 2009-2013.

Under BMI's freight transport rating system, Vietnam achieves a composite score of 54.3 out of a potential maximum of 100. Vietnam's stronger points are freight growth, transport infrastructure growth and the transport intensity index, which measures the dynamism of the country's foreign trade. BMI views Vietnam as being weaker in the other four categories: economic and political long-term risks, and the country's regulatory and competitive environment (corruption is a particular problem).

According to our latest estimates, the total value of transport and communications GDP will rise to US$6.6bn in nominal terms by 2013, representing 4.5% of Vietnam's GDP.