Logistics lacking in central VN

Saturday, Nov 12, 2016 09:22

Goods loaded at the Tien Sa Port in Da Nang City. — VNA/VNS Photo Tran Le Lam

Small scale production, scattered investment, poor connections and logistics services set big challenges for key economic zones in the coastal central region, considered a major centre of logistics for the country.

Chairman of Viet Nam Logistics Association (VLA), Le Huy Hiep said this at a recent workshop on co-operation in developing logistics systems and centres in central Viet Nam’s key economic region.

“The region has 20 deep sea ports, but the system only handles 55.5 million tonnes of cargo – 13 per cent of the country’s sea ports per year. Meanwhile, the central region’s port system could host 300,000 TEUs (twenty-foot equivalent units), an equivalent of 2.8 per cent of total domestic market share,” Hiep said.

“The regional port system only plays a role as a collection centre for cargo being sent to major ports in northern and southern Viet Nam. The region has only 422 businesses operating in logistics, with 8,000 labourers, and a revenue of VND4 trillion (US$178 million),” he said.

Hiep also said production capacity in industrial zones (IZs) across the region has not yet developed in supplying enough cargo for logistics businesses.

He said most ports lack high capacity piers for giant ship docking, while ageing facilities and services at ports could not meet the demands of investors.

Hiep also complained that four airports, built at a distance of 200km or 300km from Da Nang to Quang Nam, Hue and Binh Dinh, only managed a small airfreight of 10.8 million passengers and around 1 million tonnes of cargo per year.

He said Da Nang International Airport alone could play its role as a regional destination for international air cargo and flights.

Da Nang hosts 6.7 million tourists, and 1 million tonnes of cargo per year.

Chairman of Da Nang city’s People’s Committee, Huynh Duc Tho, said the city plans to invest in a national logistics centre in Hoa Vang district, on an area of 30ha and with investment of $370 million.

Tho said the centre will connect with the East-West Economic Corridor (EWEC) that links Viet Nam, Laos, Thailand and Myanmar, the Da Nang-Quang Ngai Expressway as well as the north-south Viet Nam national highway and railway system.

He said the centre will be situated between two key ports – Tien Sa and the anticipated new construction at Lien Chieu.

Director of Viet Nam Institute of Economics, Tran Dinh Thien said logistics in Viet Nam is still new and the cost of logistics service is unusually high.

He said logistics counts for 25 per cent of the total cost that businesses and investors have to pay.

“The region has yet to develop as a transit hub for cargo from Laos, Cambodia, Thailand and the Central Highland region and the Greater-sub Mekong,” Thien said.

He suggested the region needs a ‘maestro’ in arranging roles and the function of each port and airport.

He said Chan May port in Thua Thien-Hue could play a role as a cruise port rather than cargo port, while ports in Quy Nhon, Dung Quat, Chu Lai and Da Nang are set for specific demands of cargo, oil tankers or regular shipping routes.

Director of Chu Lai Open Economic Zone Authority (EZA) Do Xuan Dien said exporters often pay an extra $30 or $50 to transport cargo by road from Quang Nam to HCM City’s ports for export, while railway and expressways are yet to meet the demand of large cargo quantities.

Bui Tat Thang, director of the Institute for strategic development under the Ministry of Planning and Investment, said the region should be built up as a transit point for north-south cargo, with warehouses for exports and imports via EWEC.

He said the region should call on investment from the private sector in logistics in order to provide cheap and high quality services.

He said the region has not yet built linking roads to connect industrial parks, and economic zones to the national transport system (roads, railways, airports and seaports).

Nguyen Xuan Thang, from Fulbright University Viet Nam, said that a key logistics centre in Da Nang could be a good choice as it helps connect Chan May port and Economic Zone in Hue, as well as Da Nang-Quang Ngai Expressway in linking with Dung Quat and Chu Lai Economic zones in Quang Ngai and Quang Nam.

He said Da Nang should consider building a railway to transport cargo from Tien Sa to the logistics centre. 

He suggested each province could develop its own style of logistics centre for local demand, but it needs a Public-Private Partnership (PPP) investment model rather than from the State budget.

According to VLA, there are only 40 foreign shipping companies in Viet Nam, accounting for only 5 per cent of the country’s total number of shipping firms, but they transport up to nearly 90 per cent of Vietnamese import and exports, mostly to Europe, the US, the Middle East and Africa.

Quang Nam has launched the first regular Chu Lai-Incheon, Korea sea route, and the Chu Lai–Truong Hai logistics and port service unit. — VNS


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