Vietnam’s time has come

Vietnam’s time has come    The December 2007 American Shipper had a cover story titled “Vietnam on the Verge” (pages 6-21), that detailed Vietnam’s ascendance in the manufacturing and logistics world.
   News from recent weeks shows that Vietnam may very well cross that verge in June. That’s when the New World Alliance carriers — specifically APL and MOL — begin direct services linking Vietnam’s new deepwater terminal near Ho Chi Minh City to the U.S. West Coast.
   To anyone following the development of ports in Vietnam from afar, this must seem like one of those movies that come out after having watched the trailer over and over again for two months. Shippers and forwarders have been hearing of Vietnam’s prowess as a potential manufacturing hub for years, but then they’ve also been hearing about its unsophisticated container ports infrastructure for about as long.
   Until now, only feeder services have been able to access Vietnam’s container terminals, with three-quarters of the country’s cargo being handled at river ports near the southern financial hub of Ho Chi Minh City. A set of independently developed deepwater terminals 65 miles southeast of Ho Chi Minh City will remedy that, with the first to host transpacific services a PSA International terminal jointly developed with the Vietnamese government.
   The deepwater terminals will mean higher efficiency, and crucially, no dependence on feeder connections in Singapore, Hong Kong or Kaohsiung.
   It’s little surprise that APL and MOL are the ones to provide the first transpacific direct connections to Vietnam. They’ve been patiently developing their individual businesses in Vietnam for more than a decade, first through joint venture arrangements with local partners (as required by the Vietnamese government) and then through wholly owned subsidiaries.
   Forget for a moment that rates are in the tank (although that’s hard with spot rates reported by Drewry Shipping Consultants to be under $1,000 from Hong Kong to Los Angeles), these carriers have been building to this moment for years. Other carriers will soon follow, especially as demand cranks back up. For shippers, there couldn’t be a better time to consider Vietnam as a sourcing location. The currency exchange is favorable to the dollar, southern Vietnam’s logistics infrastructure is gradually coming into place, ocean freight rates are absurdly low, and you can move cargo from Ho Chi Minh City to Los Angeles in 15 to 20 days.