Vietnamese port congestion the tip of the iceberg

Vietnamese port congestion the tip of the iceberg Vietnamese ports are so congested that it may not be until new capacity is added in 2010 before the problem is solved, according to speakers at a recent shipping conference in Ho Chi Minh City.
   Representatives from Maersk Line and the Danish carrier’s sister company, APM Terminals, said cargo sits in Vietnam’s container terminals far too long, causes chronic backlogs, according to a report from Port Strategy.
   'We hardly make our schedule for Singapore,” Paul Hoogwaerts, general director for Maersk Vietnam, was quoted at the conference in early June. “Too much cargo sits in the port for too long a time here in Vietnam. Terminals are not storage areas.'
   Inland connectivity is in no better shape, speakers added.
   That Vietnam’s infrastructure is in poor shape is no new story, but the pace at which trade is flowing through them is highlighting the situation.
   'Congestion is already a real problem in Ho Chi Minh City,' Jim McAdam, president Asia-Middle East for APL & APL Logistics, told American Shipper in a December report on Vietnam. 'There may be some relief once the first phase of new ocean terminal capacity comes on stream in 2009-10. But, if demand growth exceeds 25 percent, we will likely have serious undercapacity in the years ahead.'
   McAdam said port development is well underway, but that the government can't think that new deepwater ports will be enough.
   'The infrastructure master plan should cater not only to new port developments but also landside requirements,' McAdam said. 'More than $4.5 billion has been earmarked for new port investments over the next five years. But a similar amount is required to upgrade land transportation facilities such as bridges, overpasses and the upgrading of existing and new highways systems.'
   It’s but one of a number of pressures that could hinder Vietnam’s wild growth the past few years. News outlets in Vietnam reported Monday that inflation is close to 25 percent this year, albeit on a very low base. But coupled with rising fuel prices, it could lead shippers to decide to ease off the pedal in their Vietnam strategy, rather than go full throttle.
   Moody’s, for instance, warned Friday that the bottom could drop out of Vietnam’s currency if it is not properly managed by the government. Moody’s said the economy was “overheating” and that there is “excessive inflation.”
   The problem for Vietnam is this: While inflation is hitting China hard, it still has a huge and expanding domestic market that will necessitate growth in manufacturing; but Vietnam’s growth is relying to a far larger degree on exports, as the domestic consumer market is nascent. That means an exodus of manufacturing, even temporary, could hit Vietnam square between the eyes.
   Back to the country’s ports, not much near-term help is on the way. A new set of terminals south of Ho Chi Minh will add lots of capacity and the ability to handle larger container vessels, and existing terminals are also being expanded. But 2010 is a long 18 months away. ' Eric Johnson