Despite the many challenges in the short term, the demand for cargo transportation is expected to recover and grow at a high level in the long term. In response to this trend, many investment projects are being implemented, which are expected to create a new look for the logistics industry in Vietnam in the future.
Challenges and opportunities intertwined
According to experts, in 2023, the port and shipping industry will face both challenges and opportunities. In the shipping industry, freight rates are expected to fall due to weakening demand for cargo transportation, while the market is concerned about an increase in the supply of ships in the coming time. According to Alphaliner, the number of new shipbuilding orders continues to increase, bringing the current order book to 27.9% of total market capacity, the highest level since 2012.
The phenomenon of oversupply will put a lot of pressure on freight rates in the coming time. However, according to experts from VNDirect Securities Company, there are some positive factors that can partially mitigate the negative impact of lower freight rates. Specifically, China's reopening will boost global trade and consumption. In addition, the average Brent oil price is forecast to remain around USD 90/barrel in 2023, which will help reduce fuel costs for shipping companies.
Meanwhile, the outlook for the Vietnamese port industry could be brighter in the coming time thanks to strong FDI inflows into Vietnam and the entry into force of several free trade agreements. Specifically, despite global monetary tightening, FDI disbursement in Vietnam in 2022 still increased by nearly 14%. In January 2023, according to the General Statistics Office, Vietnam attracted 103 newly licensed FDI projects, with registered capital of USD 388 million. Although registered capital decreased by 71% compared to the same period last year, the number of projects increased by 119%. This result is considered a positive signal, opening up opportunities for Vietnam in 2023 when many forecasts show that Vietnam could attract 36-38 billion USD in FDI.
According to VNDirect, the RCEP agreement, which came into effect in early 2022, boosted the growth of some manufacturing industries in Vietnam in the first half of 2022, but slowed down in the second half of the year due to declining global consumption. VNDirect experts believe that these trade agreements will have a positive impact on Vietnam's import and export activities in the coming years when global consumption recovers, thereby benefiting the Vietnamese port industry. At the same time, Vietnam's container volume is expected to grow at a CAGR (compound annual growth rate) of 8.6% from 2022 to 2030, according to the Ministry of Transport's master plan for ports in the period 2021-2030.
Increase investment to anticipate the recovery trend
Vietnam is investing heavily in port and logistics infrastructure in anticipation of long-term growth. In the first days of 2023, the Ministry of Transport announced the opening of the Tân Cảng Long Bình dry port, phase 1. The port is owned by ICD Tân Cảng Long Bình Company, Ltd., and has a total area of 105 hectares, including 30 warehouses with a total area of 500,000 square meters. Phase 1 of the ICD has an area of 24.8 hectares.
Previously, in late December 2022, the Management Board of the Quang Tri Economic Zone approved the Detailed Planning Project for the Mỹ Thủy Port Area (Hải Lăng District, Quảng Trị Province) at a scale of 1/500. The project is expected to start construction in the first quarter of 2023. The project has a planned area of 685 hectares, with 10 berths with a total length of 3,000 meters and a width of 50 meters. The berths can accommodate container ships of 100,000 DWT, bulk carriers of 100,000 DWT, and general cargo ships of 50,000 DWT. The average capacity of each berth is approximately 3 million tons per year. The Mỹ Thủy Port Area will directly serve the East-West Economic Corridor.
Many large port and logistics companies are also implementing new projects. For example, PHP, the Hai Phong Port Corporation, is currently implementing the project for piers 3 and 4 at the Lach Huyen deep-water port and is expected to be operational in the third quarter of 2024. GMD, the Gemadept Corporation, is also completing legal procedures to start construction on the Gemalink phase 2 port in the first quarter of 2023. VSC, the Vietnam Container Group Corporation, is planning to invest in the Cat Hai deep-water port in Hai Phong. Vinalines, the Vietnam Maritime Corporation, is also proposing to develop the Can Gio port with Mediterranean Shipping Company (MSC), the world's largest container carrier, and its subsidiary Terminal Investment Limited (TIL).
Along with the investment projects to develop port infrastructure, a number of new international shipping lines have been put into operation. These projects are expected to consolidate the networks of logistics companies to adapt to the trend of increasing ship size and increasing ship utilization efficiency.
In addition to the vibrant investment activities, mergers and acquisitions in the port and logistics sector are expected to be lively in 2023. Specifically, according to the plan of the Vietnam Maritime Corporation (MVN), by 2025, it will implement the divestment of Hai Phong Port, Quy Nhon Port, Can Tho Port, Cam Ranh Port, Da Nang Port, and Vinaship. Meanwhile, the State Capital Management Committee at Enterprises (CMSC) will reduce the state ownership ratio at MVN to 65%. VSC plans to spend VND600 billion to buy 49% of Vinaship shares, and VND2,000 - 3,000 billion to acquire a port operator in the Hai Phong port cluster. GMD also plans to divest Nam Hai Đình Vũ Port and sell 24% of shares in Gemalink Port to a strategic investor.
According to SSI Research experts, Vietnamese port companies have long been at a disadvantage to foreign shipping lines due to oversupply and fragmented markets. Accordingly, market consolidation is a good strategy for companies to improve their logistics chains, increase their negotiating power, and reduce competition in the industry.
(According to Khai Ky)