2013-03-23 08:26:06 - New Transportation market report from Business Monitor International: "Vietnam Freight Transport Report Q2 2013"
A projected lacklustre recovery in global demand in 2013 leads us to envisage a less than impressive pickup in Vietnamese exports, which will have a knock-on effect on the country's freight industry. Additionally, Vietnam's main export partners, the US, China and Japan, are all finding it hard to shake off the economic hangover of 2012. Vietnam's economy, however, remains on track for a robust recovery in 2013, and we view consensus estimates on growth as being overly pessimistic. Also, looking at the breakdown of exports, we are seeing encouraging evidence that Vietnam is becoming less reliant on refined crude imports and could soon become a net exporter of crude oil over the coming years.
Garment producers in Vietnam are preparing for
the Trans-Pacific Partnership agreement (TPP) that would increase the country's garment exports to the US to up to US$22bn by 2020. Vietnam presently exports US $7.6bn worth of garments to the US, and is likely to see this rise to US$13bn worth of garments by 2020. However, the country relies heavily on China, Taiwan and South Korea for raw material and in 2012 had imported US$10.77bn worth of materials by November 15. Le Quoc An, a senior advisor to the Vietnam Textile and Apparel Association, has said that the country would have to reduce this import dependence in order to export an additional US$9bn worth of products to the US by 2020. The TPP is expected to create millions of job opportunities in the area of garment production.
Full Report Details at
- www.fastmr.com/prod/552424_vietnam_freight_transport_report_q2_2 ..
We acknowledge that the risk of a potential surge in commodity prices in 2013 - especially food prices, which make up around 40% of the CPI basket - could turn out to be a wildcard for policymakers. But for now, we believe that overall conditions in Vietnam support our forecast for real GDP growth to come in relatively strong at 7.0% in 2013.
By mode, the outperformer in year-on-year (y-o-y) tonnage terms is set to be the road freight sector, with 2013's growth figure forecast to come in at just over 7%. The air freight sector will enjoy healthy growth of just under 5% this year, while rail freight's annual tonnage growth will be a less impressive 3.1%. In Vietnam's shipping sector, the Port of Ho Chi Minh City remains by far the country's largest port and will also be Vietnam's strongest performer in terms of tonnage handled this year - forecast to increase 7.56% year-on-year (y-o-y) in 2013 to reach 38.75mn tonnes, compared with the Port of Da Nang's predicted annual growth of 4.33% (to 4.16mn tonnes). On the other hand, the Port of Da Nang will enjoy the higher levels of annual growth in terms of containers handled, with y-o-y growth set to come in at double figures in 2013, as opposed to the Port of Ho Chi Minh City's lower growth of 8.03%.
Headline Industry Data
* 2013 rail freight tonnage is set to increase by 3.12% to 8.71mn tonnes.
* 2013 air freight tonnage is forecast to rise by 4.8% to 216,280 tonnes.
* Tonnage handled at the Port of Ho Chi Minh City in 2013 is forecast to grow 7.56%, whereas tonnage handled at the Port of Da Nang is forecast to increase 4.33%.
* 2013 road freight tonnage is forecast to grow by 7.03% to 754.16mn tonnes.
* 2013 total trade is forecast to rise by 5.70%.
Key Industry Trends
Government Must Delay Launch Of Cai Mep-Thi Vai Port Complex The launch of the Cai Mep-Thi Vai port complex in the south of the country has been delayed by the government of Vietnam. A delay had been proposed by Vietnam Business Forum 2012's Infrastructure Working Group and representatives from some foreign-invested businesses providing port services, it was reported in December 2012.
CEVA Logistics And Indo Trans Logistics Group Form JV
CEVA Logistics of the UK and Vietnam's Indo Trans Logistics Group have announced a joint venture (JV), to be called CEVA Logistics (Vietnam), in a move designed to strengthen CEVA Logistics' position in South East Asia. CEVA Logistics (Vietnam) will provide end-to-end integrated supply chain services and will be based in Ho Chi Minh City. CEVA Logistics had at first offered only freight management services when it began operations in the country 12 years ago.
Roads Construction Potential Limited By Viability Concerns
Vietnam's desire to improve its road infrastructure continues to be hampered by numerous issues, such as declining government spending, the lack of economic viability for toll roads and a deficiency in regulations and government institutions that causes delays in site clearances and cost overruns. We believe these problems are not likely to be resolved anytime soon and we maintain a conservative outlook on construction activity in Vietnam's road infrastructure sector.
Key Risks To Outlook
The Thai and Vietnamese transport ministries recommended at the end of 2012 that their respective governments extend the Khon Khen-Tien Sa Port road from Laem Chabang Port in Thailand to Hanoi and Haiphong in Vietnam, reported the Saigon Times. The aim is to improve the efficiency of the road.If completed, this will provide upside risk to the Vietnamese freight industry going forward.
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