Vietnam building to overcapacity

Vietnam's container traffic has been growing rapidly and to keep up with demand the government is furiously building new ports, particularly in the south, arousing concerns of overcapacity.

John Cushing, general director of international container services at SP-SSA International Terminal (SSIT), said: "Whenever we look at this much development - and it is unusual anywhere to see so many new terminal operations being built in a region at the same time - it always brings up the question - Are you building to overcapacity?"

SSIT is a joint venture between Saigon Port, SSA International Holdings-Vietnam and Vietnam National Shipping Lines (Vinalines). When it opens its container terminal in the second quarter of 2011 it will have a handling capacity of 1.2 million TEUs with the ability to receive ships of up to 8,000 plus TEUs.
Container growth in South Vietnam soared from 2.7 million TEUs in 2006 to 3.5 million TEUs in 2009 and the forecast for 2010 is 3.7 million TEUs.

Cushing said once SSIT's terminal begins operation it would be running at 80 percent capacity through to 2015 despite the fact that the region already has several container terminals including Saigon International Terminals Vietnam (SITV), SP-PSA, Tan Cang Cai Mep and Cai Mep International Terminal (CMIT).

Further developments in the south includes the Japan Bank for International Cooperation's (JBIC) Cai Mep Container Terminal project that will begin taking bids in June and Gemalink's Cai Mep Container Terminal, which has phased construction pending.

The reason for building several ports along the length of Vietnam's coastline is political not shipping economics, according to a United Nations report. "The government's decision to develop a port in each and every coastal province was not based on the country's shipping needs but rather was the result of political pressure to invest in underdeveloped areas,'' the report explained.

Ports in the north, such as Cai Lam and Hai Phone, have a draught of 10m and 5.7m allowing them to receive 3,000 TEU and 600 TEU vessels, respectively. In central Vietnam limited infrastructure and smaller cities has kept the growth of ports such as Da Nang and Quy Nhon static.

But the situation is different in the south, and one of the largest new developments is the Van Phong port project slated for completion in 2020. Costing an estimated US$3.6 billion, the port will be capable of receiving 17,000 TEU vessels.

Ports like Van Phong underline the direction the south is moving - building more deep-water ports.

"The rotation of vessels, particularly to Europe, is that they leave China before they head to Vietnam," explained Malcolm Gregory, commercial head at Cai Mep International Terminal. "This means many carriers are below 14m in draught and need at least 15m of channel depth.

"There is a lot of demand for European services to call at Ho Chi Minh and I believe almost every carrier that has critical mass from Vietnam will come next year with larger vessels as soon as the dredging is complete," he added.

Saigon Premier Container Terminal (SPCT) one of the re-gion's newest ports, which opened early this year, has 8.5m draught that will increase to 9.5m by the third quarter of this year, allowing it to receive larger feeder ships.

"Once the large vessels start plying the waters around Vietnam the feeder vessels will also get bigger in size to around 4,500 to 5,000 TEUs - 9.5m plus 2.6 to 3m tide is sufficient for those vessels to call," said Gerard van den Heuvel, chief executive officer and general director of SPCT.
(Source:www.cargonewsasia.com)