NORTHERN VIETNAM: PORT DEVELOPMENT
JUNIOR PARTNER Container volumes at Haiphong port have grown in recent years, but overall traffic is steadily slipping away from the north of Vietnam. AJ Keyes considers if this position is expected to change in the future
NORTH VIETNAM – THE JUNIOR PARTNER Using port data equivalent to 97 per cent of total origindestination container cargo in Vietnam, the geographic split between the North (principally Haiphong) and the South can be seen in Figure 2. Here, the northern ports accounted for 29 per cent in 2014, with the southern facilities handled 71 per cent, but by 2021 the share had fallen to just 27 per cent for the North and grown to 73 per cent for the ever-larger ports in the South. So, is there anything expected to occur in northern Vietnam to change the status quo? Well, according to the Vietnam Railway Authority (VRA) there are plans to boost freight moving by rail in the country, with a target of moving 11.8 million tons of goods per annum by 2030. STRONG INERTIA TO OVERCOME There is strong inertia to overcome. Currently, goods from almost all major ports in Vietnam are transported by road, leading to high logistics costs and resulting congestion. The position has not been helped by Vietnam’s railway network not receiving major upgrades for decades and it has lost its competitiveness to road transport (and also aviation), which are clearly now preferred for both speed and convenience of service. For North Vietnam, the key development will be a new rail project to Lach Huyen port in northern Haiphong City, which would start at Du Nghia station on the Gia Lam – Haiphong railway between Hanoi and Haiphong. This new rail link is part of a wider rail investment initiative of nine different projects, which will see the rail network boosted from 2440km to 6354km, collectively expected to cost an estimated VND32.6 trillion ($1.43 billion). Unsurprisingly, VRA has suggested that foreign investment could be needed to bring the projects to successful fruition. The scale of the challenge in Vietnam to invigorate its rail network for freight is evident and while the plans could prove beneficial if successfully developed, this infrastructure spending is unlikely to generate additional cargo for ports in
the North of the country. There is little logic in container traffic being moved from Haiphong to Central (and Southern) markets when there is already a much higher number of ports in these areas which are already undergoing investment. The older Haiphong port has 21 wharves offering a total length of 3567m but with water depths ranging between 7.5m and 9.4m, access to higher capacity vessels is constrained. However, on the positive side the introduction of the Haiphong International Container Terminal (HICT) alleviated the pressure when it opened in mid-2018, with a water depth of 16m and the ability to receive ships in excess of 12,000TEU. With space constraints at HICT, the port authority has now signed a US$310 million contract to construct Terminal 3 and Terminal 4 with Phu Xuan Construction at the 470,000m2 zone in the Lach Huyen port area. The new facilities are expected to be completed in 2024 and will offer 750m of berthing, with an additional area for handling 160TEU capacity barges. This expansion is part of plans to have six container terminals by 2025 and sufficient capacity to accommodate vessels larger than 8000TEU.
Source: Dataand.com
8 Figure 1: Development of Origin- Destination Container Volumes at Haiphong Port 2014-2021, in ‘000 TEU
8 Figure 2: Split Between North & South Ports in Vietnam 2014-2021, in %
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Note: Share based on origin- destination cargo only, transshipment excluded
MAY 2022 | 25
Source: Datand.com
The Port of Haiphong is situated within the economic triangle areas of Hanoi – Haiphong – Quang Ninh, in northern Vietnam, serving the third most populous city in the country, with more than two million inhabitants in an area of just 1500km2. The port is also located in Group One, of the Vietnamese government’s six clusters of ports for expansion that collectively represent the focus of the long-term masterplanning process. However, is this port, and any expansion plans, sufficient for the North of Vietnam to meet future demand or is it being marginalised by continued development of ports in the South? Recent container growth at Haiphong is certainly positive. As Figure 1 shows, the total origin-destination container throughput in 2014 was almost 1.52 million TEU and continuous increases since have resulted in a 2021 total of just over 2.70 million TEU – reflective of average annual growth of 8.6 per cent over the period.
