The benefits of industrial property with built-in seaports in DEEP C

In Vietnam, industrial zones (IZs) will require substantial investment to compete with the capacity and scale of DEEP C Industrial Zones when the northeastern province of Quang Ninh joins Hanoi and the northern port city of Haiphong to become a key import-export gateway of the Northern Key Economic Region by 2030. If Quang Ninh begins constructing the route from the Dam Nha Mac intersection to Bac Tien Phong IZ by DEEP C in the fourth quarter of this year, this objective will likely be reached shortly.

Le Quang Trung, deputy general director of Vietnam Maritime Corporation’s, visited Quang Ninh province in early 2023 to discuss the possibility of cooperation in developing seaport services. Infrastructure in Quang Ninh has improved, but “port and logistics network are unreasonable,” Trung said.

Most seaports adhere to the general model, the number of container terminals is minimal, and connectivity is a vulnerability of the Quang Ninh seaport system.

Trung remarked that Quang Ninh’s problem is comparable to that of the southern province of Ba Ria-Vung Tau more than 10 years ago, when the region struggled to address the cost and source of goods.

“Quang Ninh will not become a transshipment hub of the important northern key economic region until the local government establishes an obvious improvement policy on infrastructure investment and seaport businesses and streamlines administrative procedures to help businesses reduce costs,” Trung said.

In contrast to Ba Ria-Vung Tau, Quang Ninh will have no difficulty sourcing products from the outset, a crucial factor in ensuring a well-functioning seaport system. DEEP C is an enormous manufacturing hub that supplies goods for the global market, a solid foundation for Quang Ninh to achieve its goal. By 2025, the port throughput will reach over 122 million metric tonnes, and the port service will contribute 1.2-1.5 per cent of regional GDP, marking Quang Ninh on the international and regional maritime map.

Trung’s words have drawn the interest of investors and analysts in the context of a steep decline in port business profits due to low service prices of approximately $13 per 20-foot container. Vietnam’s import and export container management services are the cheapest in the region, costing just 80 per cent of Cambodia’s, 70 per cent of Malaysia’s, and 46 per cent of Singapore’s prices. However, the Vietnamese market still struggles to develop park initiatives with seaports.

Distinctive and fundamental components

Dr. Tran Dinh Thien, chairman of the Central Institute for Economic Management, stated that the northern key economic region has been deemed to be “the most rapidly forming” and is demonstrating ideal potential in terms of influence and inter-regional links with the Vietnam-China economic corridors, especially the imminent development boom of a large area in Southwest China.

“Haiphong, Quang Ninh, and their port clusters are the principal seaport gateway of this booming region,” Thien said.

The IZ integrated with the seaport extensively affects the region’s economy, society, and environment. Analysts claim that this type of economy stands out due to its extensive use of land and long existence. Particularly, the choice and preparation of the site for the construction of the manufacturing facility will adhere to the optimal principles for terminal construction: proximity to the main traffic axis, the airport for product consumption, and the convenience of providing production services.

According to Quang Ninh and Haiphong authorities, DEEP C is a significant port-logistics-industrial complex. Development is based on the regional and local socioeconomic development plan, tied to the economic growth objectives of Haiphong and Quang Ninh with domestic economic connections and situated in the context of international trade.

In addition, the master planning of DEEP C ensures regional and sector-specific planning associated with security and defense to maximize comparative advantages and be compatible with labour resources and environmental protection while using IZs as the core for forming new urban areas.

Particularly, the location of the seaports in DEEP C is optimal due to the harmony between natural and man-made elements, attracting labour sources and people to reside there – a prerequisite for forming new urban areas.

Coexisting with the local communities and environment

In the Asia-Pacific region, logistics and industrial real estate investments will double over the next 3-5 years as investors seek to expand their supply chain market share. According to JLL’s most recent report on industrial real estate and logistics, the volume of annual investment in the logistics sector will increase from $25-30 billion during 2019-2020 to $50-60 billion in the 2023-2025 period.

Vadym Sheronov, managing director of Royal Haskoning DHV in Vietnam, stated that investors tend to “seek and pick partnerships with the same standards for sustainability, environmental protection, and labour safety”. According to Sheronov, this creates an edge for IZs that are geared towards eco-industrial parks, and DEEP C is a prime example of a park that successfully attracts investors in the high-tech industry.

Bac Tien Phong and Nam Tien Phong IZs, located in the Quang Yen coastal economic zone, are two significant seaport-logistics-industrial complexes in DEEP C, a key component of the development paradigm for Quang Ninh. The seaport infrastructure of DEEP C connects directly to Lach Huyen Seaport in Haiphong via the Chanh River route, which is presently undergoing dredging.

This comprehensive development plan will contribute to reducing inland transport costs, promoting logistics development in the region, and improving Quang Ninh’s competitiveness.

Koen Soenens, general sales and marketing director of DEEP C, stated that its integrated seaport facilities would serve vessels with a capacity of up to 50,000DWT, carrying both general cargo and liquids. The initiative to dredge the Chanh River is a crucial investment for Quang Ninh’s transformation into a key logistics hub in northern Vietnam.

“Over a total length of almost 13km, we will dredge the river up to -11m corresponding draught,” Soenens said. “This will secure fast and safe sailing between our port complex and Lach Huyen Seaport in Haiphong.”

In response to DEEP C’s initiatives and long-term vision, several reputable international transport and storage service providers, such as BW Industrial, CORE5, and others, have recently announced new ventures. Soenens believes that these are the earliest indications of a prosperous year for both Bac Tien Phong and Nam Tien Phong IZs, which he predicts will become the next best investment location in the north with a blend of industrial services, logistics growth, and port.

“Obviously, this objective would not be achievable without ongoing local support in terms of labour supply, land, licensing procedures, administrative reform, and transportation investment,” Soenens said. “We want to establish a business community that shares common sustainable development values by establishing an eco-industrial park model.”

DEEP C leaders plan to continue to focus on renewable energy projects, industrial symbiosis opportunities, and recycling solutions that provide environmental, economic, and social benefits to local communities.