A series of new investment projects will help form modern ports to meet the growing needs of the international freight market. Photo: TL

Challenges and advantages

According to experts, in 2023, the seaport and shipping industry will face both challenges and advantages. In particular, the shipping industry is facing a decrease in freight rates due to the weakening demand for freight transport while the market is concerned that the supply of ships will increase in in the future.

According to Alphaliner, the number of new shipbuilding orders continues to increase, bringing current orders to 27.9% of total market capacity – the highest level since 2012.

The phenomenon of oversupply will put great pressure on sea freight rates in the near future. However, according to experts of VNDirect Securities Company, there are a number of positive factors that can somewhat mitigate the negative impact of the reduction in 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 per barrel in 2023, which will help reduce fuel costs for shipping companies.

Meanwhile, the picture of Vietnam's seaport industry may be brighter in the near future thanks to a strong return of FDI and a number of FTAs taking effect. Specifically, despite the global monetary tightening, FDI disbursement to Vietnam in 2022 still increased by nearly 14% in 2022. In January 2023, according to the General Statistics Office, Vietnam attracted 103 FDI projects newly licensed with a registered capital of USD 388 million. Although the registered capital decreased by 71% over the same period last year, the number of projects recorded increased by 119%. This result is considered a positive signal, opening up opportunities for Vietnam in 2023 when many forecasts show that Vietnam can attract USD 36-38 billion in FDI.

According to VNDirect, the RCEP Agreement that came into effect in early 2022 has boosted some Vietnamese manufacturing industries to achieve strong growth in the first half of 2022, but slowed down in the second half of the year due to a drop in global consumption. VNDirect experts believe that these trade agreements will positively affect Vietnam's import and export activities in the coming years when global consumption recovers, thereby benefiting the Vietnamese seaport industry. At the same time, Vietnam's container throughput is expected to grow at a CAGR (compound annual growth rate) of 8.6% in 2022-2030 according to the Ministry of Transport's target under the seaport master plan for the 2021-2030 period.

Increase investment and catch the recovery trend

Believing in long-term growth prospects, many large investment projects in the field of seaports and logistics are being implemented as well as planned to anticipate the growth of market demand. At the start of of 2023, the Ministry of Transport issued a Decision to announce the opening of Tan Cang Long Binh inland port phase 1. Tan Cang Long Binh ICD is owned by Tan Cang Long Binh ICD Joint Stock Company with an area of 105ha, including 30 warehouses, a total area of 500,000m2. Currently, phase 1 ICD has an area of 24.8 hectares.

Previously, at the end of December 2022, the Management Board of Quang Tri Economic Zone approved the detailed construction planning project of 1/500 scale of My Thuy port area (Hai Lang district, Quang Tri province). The project is expected to start construction in the first quarter of 2023.

Accordingly, the project has a planning area of 685 ha, arranging 10 wharves with a total length of 3,000 m and 50m wide. The berth can receive 100,000 DWT container ships, 100,000 DWT bulk carriers, and 50,000 DWT general ships. The average capacity of each berth is about 3 million tons/year. My Thuy port area will directly serve the East - West economic corridor.

Many big enterprises in the seaport and logistics industry are also implementing many new projects. Typically, Hai Phong Port Joint Stock Company (PHP) is constructing wharf projects 3 and 4 at Lach Huyen deep-water port and is expected to be put into operation in the third quarter of 2024. Gemadept Joint Stock Company (GMD) is also completing legal procedures to start construction of Gemalink port phase 2 in the first quarter of 2023. Vietnam Container Corporation (VSC) is planning to invest in Cat Hai deep-water port in Hai Phong. Vietnam National Shipping Lines is also proposing to develop Can Gio port together with Mediterranean Shipping Company (MSC) - the world's largest container shipping company and a member company, Terminal Investment Limited (TIL).

Along with investment projects to develop port infrastructure, a series of new international transport routes have been put into operation. These projects are expected to strengthen the network of logistics companies to adapt to the trend of increasing vessel size and increasing ship efficiency.

In addition to exciting investment activities, mergers and acquisitions in the field of seaports and logistics are forecast to be bustling in 2023. Specifically, according to the plan of Vietnam National Shipping Lines (MVN), by 2025, it will divest Hai Phong Port, Quy Nhon Port, Can Tho Port, Cam Ranh Port, Da Nang Port and Vinaship.

Meanwhile, the Committee for the Management of State Capital at Enterprises (CMSC) will reduce the state ownership rate in MVN to 65%. VSC plans to spend VND 600 billion to buy 49% shares of Vinaship, and spend VND 2,000 - 3,000 billion to buy a seaport operator in Hai Phong port cluster. GMD also plans to divest from Nam Hai Dinh Vu port and sell a 24% stake in Gemalink Port to strategic investors.

According to experts of SSI Research, Vietnamese port companies have long been at a disadvantage against foreign shipping lines due to oversupply and a fragmented market. Accordingly, market consolidation is a good strategy for companies to complete the logistics chain, increase negotiation capacity and reduce competition in the industry.