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Just Released: "Vietnam Freight Transport Report Q1 2014"

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2013-12-14 10:21:37 - Fast Market Research recommends "Vietnam Freight Transport Report Q1 2014" from Business Monitor International, now available

Although we expect the Vietnamese economy to record yet another quarter of sub-par growth in Q4 2013 (at the time of writing), we are beginning to see potential for upside surprises to domestic demand over the coming quarters, providing potential comfort to the country's freight mix. Recent data on foreign direct investment inflows, remittances, passenger car sales, and property market launches, suggests to us that domestic demand is on a nascent recovery, setting the stage for stronger 2014 growth.

The general consensus is expecting the Vietnamese economy to suffer yet another quarter of sub-par growth mainly due to subdued external demand and the lack of progress on banking sector reforms. This is closely in line with our view that real GDP

growth will come in at just 5.3% in 2013, a slight improvement from 5.2% in 2012. Looking ahead to 2014, however, evidence of improving macroeconomic fundamentals in Vietnam (especially with regards to the outlook for domestic demand) suggests to us the balance of risks to our growth forecast of 6.0% is gradually tilting towards the upside.

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Total foreign direct investment (FDI) inflows are also set to surpass the government's full-year target of US $13bn, after data released by the Ministry of Planning and Investment showed that inflows surged by 19.5% year-on-year (y-o-y) growth over the first eight months of the year. The strong reading chimes with our view that the country's solid long-term growth story should continue to attract foreign investors over the coming years.

In terms of the Vietnamese freight industry, 2014 is set to see healthy growth across the board, albeit slightly slower than 12 months previous for most modes. Leading the way for year-on-year growth will be road freight with impressive double digit increases expected (11.90%). The air freight sector will see annual tonnage growth of 5.11% in 2014, while the ports of Da Nang and Ho Chi Minh City will both perform well (7.00% and 6.06% respectively. Rail freight lags a little in y-o-y growth terms, with 3.12% annual growth pencilled in for 2014.

Headline Industry Data

* 2014 rail freight tonnage is set to increase by 3.12% to 7.52mn tonnes.
* 2014 air freight tonnage is forecast to rise by 5.11% to 198,700 tonnes.
* Tonnage handled at the Port of Ho Chi Minh City in 2014 is forecast to grow 6.06%, whereas tonnage handled at the Port of Da Nang is forecast to increase 7.00%.
* 2014 road freight tonnage is forecast to grow by 11.90% to 902.64mn tonnes.
* 2014 total trade is forecast to rise by 5.30%.

Key Industry Trends

Vinashinlines Completes Sale Of 90% Of Fleet - Vinashinlines, the Vietnamese shipping company, has sold off 90% of its vessels, according to Hellenic Shipping News in October 2013. The firm added that a number of the carriers had been purchased for prices above their original valuation. Vinashinlines' bankrupt parent company Vinalines has revealed plans to reduce its operations, after reaching agreements with crediting organisations and assessing industry demand.

Vanguard Opens New Vietnamese Offices - Vanguard Logistics Services announced that it had extended its reach in Vietnam with the establishment of new offices in Hanoi and Haiphong, following on from the opening of its inaugural office in Ho Chi Minh City six years ago.

Airport Clears Cargolux 747-8 Operations - The first Boeing 747-8 freighter flight has been operated by Luxembourg-based cargo airline Cargolux at Tan Son Nhat International Airport in Ho Chi Minh City it was reported at the end of July 2013. The move comes after the aircraft secured certification from the airport. The first-ever Boeing 747-8 freighter revenue flight was operated by the airline to Hanoi's Noi Bai International Airport in March, thereby making this destination the 100th 747-8 certified airport worldwide. Meanwhile, Cargolux has also managed to raise its air cargo services destined to Hanoi to three times on a weekly basis.

Key Risks To Outlook

Vietnam's transport ministry has announced that it will not issue any licenses for the construction of new container ports in Ba Ria-Vung Tau, Ho Chi Minh City and Dong Nai until 2015. This comes as ports in Cai Mep-Thi Vai have been carrying out operations at far below capacity. This forms part of measures by the government to enhance operation efficiency of the port system in the three localities. Meanwhile, the government has also decided not to expand existing ports in Ho Chi Minh City to move goods to Cai Mep-Thi Vai. The ministry will consider granting permission for new ports only after 2015 depending on market demand.

Headwinds are expected in the short term for coffee exports in Vietnam. The country's coffee exports are likely to stagnate over the coming quarters due to lower robusta prices and a coffee export sector crisis. Coffee prices in Vietnam have been on a declining trend for the past two years, and have averaged US $1,918/tonne since the start of 2013, down 3.8% y-o-y. As a result, coffee farmers have been hoarding beans in order to obtain better prices later on. Meanwhile, of the 127 local coffee export firms that operated in Vietnam a year ago, 56 have ceased trading, as the industry is plagued by insolvency, and a credit squeeze, according to industry reports.

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at

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