Though the general consensus is relocating Ho Chi Minh City’s ports to Vung Tau is a necessity, many export-import enterprises are concerned that their business will be badly hit by the move, while domestic shipping companies are pleased. Giang Thanh tells us why.
The relocation of ports from Ho Chi Minh City is a serious cause of concern for southern city enterprises relying on the close proximity of the port for swift exports or deliveries, but domestic shipping lines are ready to welcome the move.
Currently the ports in Ho Chi Minh City handle about 25 million tonnes of goods per year, or more than 25 per cent of the total quantities of goods nationwide.
A huge volume of goods arrive and leave the city-based ports to serve the trade and production of enterprises located in the southern city area.
So, if the city has no more commercial ports, the city will lose income from port operations and Ho Chi Minh City-based enterprises will be forced to deliver and receive goods from a location hundreds of kilometres away to great expense.
Pros and Cons
Representatives of many Ho Chi Minh-based shipping enterprises and branches agree that, given the increasing volumes of imports and exports in recent years, the relocation of ports from the crowded city area is necessary.
On the other hand, the process of relocation will have immediate adverse effects on the community of companies in Ho Chi Minh City.
Therefore, relocation must be planned carefully so as not to leave a void in the market or affect the flow of goods circulating smoothly in the city, said representatives spoken to by Vietnam Investment Review.
According to the calculations of Vo Phuoc Hoa, director general of import-export company Seaspimex, in-land transport charges in Vietnam are realtively high compared with transport charges to foreign countries.
If the ports here are relocated to Vung Tau, transport charges and other expenses will double if concerted efforts are not made to improve roads, reduce tolls and simplify administrative procedures.
For example, transporting a container of dry goods from Ho Chi Minh City to Vung Tau under current conditions costs about $160, equivalent to the cost of sending a container of goods from Ho Chi Minh City to Taiwan.
Meanwhile, the transport of a container of goods from Hoa’s factory in Tan Binh district to Saigon Port now costs only $80, including cargo handling charges.
According to Hoa, if goods are handled at Saigon Port, even motorcycles can be an effective means of transport.
But if the goods are to be delivered in Vung Tau, trucks are the only means of transport, which will take a lot of time and cost more.
Also, in the event there is an error concerning goods-related documents it will take at least a day to correct the error back in Ho Chi Minh City.
Another advantage of delivering goods at ports in Ho Chi Minh City is that subcontracted goods [produced for foreign contractors with materials imported from abroad] can be exported on the same night, while transporting such goods to Vung Tau will take more time.
According to Diep Nam Hai, head of Cho Lon Food Import-Export Enterprise, the relocation of Ho Chi Minh City-based ports to Vung Tau will weaken the competitiveness of Ho Chi Minh City-based enterprises as ports in Vung Tau will cause production costs to increase.
For enterprises importing materials to make products for export, transport charges will increase at both ends - the import and export ends - not to mention various tolls along the itinerary.
For exporting enterprises, this means declining competitiveness against regional enterprises such as those in China, Indonesia and Thailand.
According to Hai, another setback is that the planning of industrial parks (IPs) and the dissemination of information about the relocation of ports were not well coordinated.
While many enterprises producing goods for export have moved their plants to IPs in the northwest, such as Cu Chi, Ben Luc and Long An, as a result of public concern over the pollution they caused in inner-city areas, the ports are moving in the contrary direction to Vung Tau.
Although a barge port has been planned for the transportation of containers in Binh Dien, halfway to Vung Tau from Ho Chi Minh City , it is not as convenient as a location near the ports.
"The information about the relocation of ports should have been announced before the move of factories so that enterprises could have had sufficient time for a choice of locations which are suitable to them," Hai said.
According to Vo Ngoc Lang, deputy director of Luc Tinh Agricultural Products and Food Company, his company was formerly in a better location than other vegetable oil companies because his oil plant was near Tan Thuan Stevedoring Terminal.
This helped reduce most of the charges for carrying materials from the terminal to the plant for his firm. It is now a common trend for oil plants to move to locations near the ports to get such an advantage.
The relocation of the ports from the city would hence put his plant in a disadvantageous position.
Shipping lines support the relocation
While the relocation of ports is a headache for many enterprises, domestic transport companies are upbeat over the move.
According to Tran Thi Minh Phuong, director general of Minh Phuong Freight Forwarding Company, under current conditions, it is necessary to relocate ports from the city area.
The supervision and delivery of goods at ports in Ho Chi Minh City has become an increasingly stressful task due to traffic congestion.
Phuong’s company’s goods are lying idle on docks because trucks are not permitted to travel in the daytime while roads in the city are not able to meet the heavy flow of lorries entering and leaving the city.
Meanwhile, mushrooming toll gates and overcrowded streets are also good reasons for transport companies to approve of the relocation of ports.
Similarly, foreign shipping lines that are operating in Ho Chi Minh City agree to the port relocation.
A representative of Taiwan's Evergreen Hatsu Marine operating in Ho Chi Minh City said - "I believe the city’s policy to move the ports out of the city area is a sensible one."
"If the ports are not relocated, heavy-tonnage ships will not be able to enter the ports in Ho Chi Minh City because these areas are overcrowded.
"Ships can enter the ports in Vung Tau easily as there are deep-water ports there. It is true that transport expenses from Vung Tau to Ho Chi Minh City will be higher to the disadvantage of many enterprises.
"But, in the long run, it is a sound policy to relocate the ports in order for Vietnam's port system to grow on an equal footing with major ports in the region," he added.