Seaport Capacity in Vietnam Troubles Firms

My Phu Port in Vietnam

Viet Nam’s economy has grown rapidly since the country joined the WTO, leading to a surge in demand for imports and exports. The country’s main seaports in Ho Chi Minh City in the south and Hai Phong City in the north are struggling to cope with demand and with poor infrastructure leading to a build-up of goods and losses to firms for late delivery, according to reports from port managers' complaints to the Vietnam News in late May 2008.

Over the last five years, the amount of goods exported and imported has trebled. Port capacities in this same time has not increased, and only Nam Ninh and Dinh Vu ports where built.

Many ports in Vietnam reported troubles:

In Hai Phong, Vietnam's major port city, there are now 30 ports in the city and 50 docks totalling 5 kilometer in length and able to serve ships up to 40,000 DWT (dead weight tonnage). The volume of cargo loaded and unloaded in the northern port city accounts for 25-30 percent of all seaborne goods. In 2003, 11.9 million tonnes of goods passed through Hai Phong ports. In 2006, the port saw a 46 percent increase, handling 16.5 million tonnes, while in 2007, 24.1 million tonnes of goods passed through the port. Hai Phong’s largest sub-port, Hoang Dieu, which stretches 1,720 m and has 11 docks was designed to handle between 35 million to 40 million tonnes of cargo per year. However, the lack of capacity at Hai Phong ports, which is blamed on poor business forecasts that previously predicted that the city would only need to handle around 12 million tonnes in 2007, could not cope with more than twice that figure in reality.

At the Chua Ve, the north’s biggest container port, authorities were unable to cope with the sheer volume of goods needing to be handled. In April 2008 alone, the amount of goods passing through this port rose by 30 percent over the same period in 2007. To cope with the extra demand, the port authority has had to lease a 10,000 sqm plot of land to store extra containers. Sometimes the port even had to refuse their big clients, such as EverGreen, when they did not have any space left for ships to dock.

At Tan Cang port in Ho Chi Minh City, the volume of imports and exports combined rose by 21 percent in the first four months of 2008 against the same period in 2007.The volume of imports alone rose by 43 percent. The bulk of these imports, 66 percent, consisted of fuel and production materials. The remainder included machinery, components and consumer goods, the customs office said. Due to the build-up of containers, imports destined for HCMC are being held in temporary storage at transit ports in Hong Kong and Singapore, among others. In 2007, service agencies for Tan Cang and Cat Lai ports in HCMC had to process about 1,400 shipments of goods a week – now they are having to cope with 2,500.

Truong Van My, deputy general director of Forwarding Development Joint-Venture Company No 1, told Vietnam News that the wharf his firm had to use was designed to handle only three vessels at a time. It is now having to cope with six. Moreover, due to its small area, containers unloaded from vessels at the port must be piled six or seven high while they are waiting to be moved out of the port. It takes between seven and eight days for owners to get their goods.

Most firms reported spending on average seven or eight days clearing customs and then another seven or eight days moving and unloading their containers. The backup is creating significant losses for companies due to late deliver and container-storage fees of US$0.8 to $2.4 a day, in addition to staff salaries.

Proposals to resolve the problem of port delays have not proved feasible, say officials. The limited handling capacity of port service providers is partly to blame for the build up of goods. Most of these providers are ill-equipped to handle the kinds of volumes they are now required to do.