Efficient Logistics Blancas, Isbell, Isbell, Tan, Tao THE WORLD BANK Efficient Logistics A Key to Vietnam’s Competitiveness Luis C. Blancas, John Isbell, Monica Isbell, Hua Joo Tan, Wendy Tao DIRECTIONS IN DEVELOPMENT Countries and Regions Public Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure Authorized 83031 Efficient Logistics DIRECTIONS IN DEVELOPMENT Countries and Regions Efficient Logistics A Key to Vietnam’s Competitiveness Luis C. Blancas, John Isbell, Monica Isbell, Hua Joo Tan, Wendy Tao Efficient Logistics • http://dx.doi.org/10.1596/978-1-4648-0103-7 © 2014 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 16 15 14 13 This work is a product of the staff of The World Bank with external contributions. 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Blancas, John Isbell, Monica Isbell, Hua Joo Tan, Wendy Ta. 1 online resource. — (Directions in development) Includes bibliographical references. Description based on print version record and CIP data provided by publisher; resource not viewed. ISBN 978-1-4648-0104-4 (epub) — ISBN 978-1-4648-0103-7 (alk. paper) 1. Freight and freightage—Vietnam. 2. Business logistics—Vietnam. 3. Industrial policy—Vietnam. 4. Economic development—Vietnam. 5. Vietnam—Economic policy. I. World Bank. II. Title. HE199.V5 388’.04409597—dc23 2013041631 Efficient Logistics • http://dx.doi.org/10.1596/978-1-4648-0103-7 v Foreword xi Acknowledgements xiii About the Authors xv Abbreviations xvii Overview 1 Chapter 1 Introduction 7 Objective and Scope 7 Approach and Methodology 8 Note 10 Chapter 2 Vietnam’s Current Situation 11 Economic Overview 11 Status of Existing Infrastructure 23 Strategic Freight Corridors 49 Notes 63 References 65 Chapter 3 Freight Stakeholder Challenges and Opportunities 69 Marine Terminal Operators 69 Ocean Carriers 74 Logistics Service Providers 80 International BCOs 91 Domestic BCOs 108 Trucking Industry 110 Notes 111 Reference 112 Chapter 4 Issues Screening and List of Actionable Recommendations 113 Freight Logistics Challenges 113 Development of a Multicriteria Evaluation Matrix 119 Contents vi Contents Efficient Logistics • http://dx.doi.org/10.1596/978-1-4648-0103-7 Goals Assessment and Recommendations to Improve Performance 120 Institutional Mechanisms to Support Logistics Policy Making 143 Notes 144 References 145 Appendix A Supporting Calculations 147 Appendix B Overweight Container Audit Process 159 Miniature Concept of Operations for Automated Weight Auditing and Fine Assessment 159 Note 160 Appendix C Entities Interviewed 161 International and Domestic Beneficial Cargo Owners: 27 161 Factories: 4 161 Logistics Service Providers: 11 161 Ocean Carriers: 5 161 Marine Terminal Operators: 15 162 Trucking Companies: 4 162 Trade Associations: 4 162 Government Entities: 4 162 Appendix D Methodology for Calculating the Cost of Congestion on the Vietnamese Economy 163 References 166 Appendix E Customs Flow Charts 167 Appendix F Components of Successful Public-Private Partnerships 171 Reference 173 Appendix G Organizational Structure of the Ministry of Transport of Vietnam 175 Glossary 179 Boxes 3.1 CenterPoint Intermodal Center, Ellwood, Illinois 87 4.1 Ports of Los Angeles and Long Beach Clean Truck Program 136 4.2 Global Logistic Properties Road Ports: China Test 138 F.1 Florida State Department of Transportation PPP for I-595 172 F.2 Structuring Successful Public Private Partnerships 172 Contents vii Efficient Logistics • http://dx.doi.org/10.1596/978-1-4648-0103-7 Figures 1.1 Analytical Approach 9 2.1 Vietnam GDP by Industry Sector, 1990–2011 12 2.2 Regional Origin of Vietnam’s Six Key Export Commodities 13 2.3 Average Worker Monthly Base Salary in Select Cities of Developing Asian Countries, 2011 15 2.4 Structure of Government Institutions in the Transport Sector 20 2.5 Vietnam: Container Handling Volume by Region, 2000–11 25 2.6 Estimated Terminal Utilization Levels at HCMC and Cai Mep-Thi Vai Ports 30 2.7 Vietnam: Demand and Supply at Southern Region Ports, 2000–20 31 2.8 Number of Weekly Linehaul Services Calling at Cai Mep-Thi Vai, 2009–12 31 2.9 Vietnam: Demand-Supply at Northern Ports without Lach Huyen 34 2.10 Comparison of Ocean Freight Rates to Japan and the United States, 2006–11 35 2.11 Haiphong/Cai Lan Port Utilization Rates by Terminal, 2010–20 36 2.12 Vietnam: Demand and Supply at Northern Region Ports, 2000–20 37 2.13 Average Container Vessel Sizes Calling Haiphong and Cai Lan, September 2012 37 3.1 Asia-North Europe Services: Average Vessel Size, October 2012 71 3.2 Ocean Carriers: Relative Cost of Operations in Vietnam 75 3.3 Challenges That Impact Ocean Carrier Operation Costs in Vietnam 76 3.4 Qualities of the Ocean Carrier Staff Functions for the Industry 76 3.5 Perceived Port Operations Performance 77 3.6 Comparison of Vietnam Operating Costs to Other Asian Countries 81 3.7 Vietnam Trucking Costs Compared with Other Asian Countries 83 3.8 Vietnam Trucking Service Quality Compared with Other Asian Countries 84 3.9 Average Rating of the Perceived Business Impacts of Inland Trucking Factors 88 3.10 Type of Products Exported by Respondents 91 3.11 Types of Products Imported by Respondents 92 3.12 Marine Terminals Used by Respondents 93 3.13 Trucking Costs in Vietnam Compared with Other Asian Countries 95 3.14 Trucking Service Quality in Vietnam Compared with Other Asian Countries 95 3.15 Perceived Level of Highway Congestion in Vietnam Relative to Regional Peers 97 3.16 Factors Impacting Airfreight Logistics Costs 100 viii Contents Efficient Logistics • http://dx.doi.org/10.1596/978-1-4648-0103-7 3.17 Adequacy of Warehouse Facilities 101 3.18 Comparison of Warehousing in Vietnam with That of Other Asian Countries 102 E.1 Import Customs Clearance: e-Declaration Process Flow 168 E.2 Export Customs Clearance Process 169 G.1 MoT Organization: 2012 176 Maps 2.1 Vietnam: Economic Geography 16 2.2 Vietnam: Six Port Groups and Main Container Ports (above 10,000 TEUs per annum) 27 2.3 Vietnam: Greater HCMC Main Container Terminals 42 2.4 Vietnam: Fragmentation of the Haiphong Port System 44 2.5 Location of Van Phong in Vietnam’s Main-Port Network 46 2.6 Vietnam: Six Primary Freight Corridors 51 2.7 HCMC-Long Thanh-Dau Giay Expressway 54 2.8 HCMC-Long Thanh-Dau Giay Expressway Link to Can Tho 55 2.9 Cho Gao Canal 60 2.10 Vietnam National Railway System 62 B3.1.1 CenterPoint Intermodal Center, Ellwood, Illinois 87 Tables 2.1 Vietnam Average Annual GDP Growth by Sector 12 2.2 Vietnam’s Top 12 Trading Partners, 2011 14 2.3 Vietnam’s Freight Volumes by Mode, 2008 and Forecast to 2030 19 2.4 Import Cost Comparisons for 40-Foot Container of General Merchandise 21 2.5 Export Landed Cost Comparisons for 40-Foot Container of General Merchandise 21 2.6 Vietnam: Container Ports, Handling Volumes, 2007–11 24 2.7 Vietnam: Current Terminals at Ho Chi Minh City and Cai Mep-Thi Vai 29 2.8 Vietnam: New Terminals Planned at Ho Chi Minh City and Cai Mep-Thi Vai 30 2.9 Linehaul Services Calling at Cai Mep-Thi Vai as of September 2012 32 2.10 Current and Expected Terminals in Northern Vietnam: Haiphong, Dinh Vu, Cai Lan, and Lach Huyen 33 2.11 Vinalines’ Shareholdings of Main Vietnamese Ports and Planned Projects 41 2.12 Vietnam: Top 30 Global Container Ports in 2011 and Fragmentation of Vietnamese Ports 45 2.13 Distance from Main Southeast Asia Gateway Ports to Van Phong 47 [...]... Delta inland waterway networks and projects to develop Vietnam’s expressway sector He has also conducted public sector technical assistance and analytical work in transport and logistics in China, Malaysia, and Vietnam Prior to joining the World Bank he was an Associate with MergeGlobal, a financial and strategic advisor to firms in the global transport and logistics industry; a Research Analyst at... World Bank The work was led by Luis C Blancas (Transport Specialist, EASIN), under the overall guidance of John Roome (Sector Director, EASSD), Victoria Kwakwa (Country Director, EACVF), Jennifer Sara (Sector Manager, EASVS), Abhas Jha (Sector Manager, EASIN), and Paul Vallely (Senior Transport Specialist and Transport Cluster Leader, EASVS) The report’s co-authors are Luis C Blancas of the World Bank;... Analyst, EASIN) Thao Phuong Tuong (Team Assistant, EACVF), Carla Teresa Sarmiento (Resource Management Assistant, EAPCA), Iris David (Program Assistant, EASIN), Teresita Ortega (Program Assistant, EASWE), and Cristina Hernandez (Program Assistant, EASWE) provided excellent production support throughout The information and insight obtained from numerous private companies, transport carriers, logistics. .. International Terminal SP SPCT SP-PSA SSIT STS ship -to- shore Tan Cang–Cai Mep Container Terminal TCCT TCIT Tan Cang–Cai Mep International Terminal Tan Son Nhat Cargo Services TCS 20-foot equivalent unit container TEU terminal handling charge THC TPP Trans-Pacific Partnership Tan Son Nhat Airport TSNA Vietnam Customs Information System VCIS Vietnam International Container Terminals VICT VNACCS Vietnam Automated... ASEAN Association of Southeast Asian Nations BCO beneficial cargo owner BOT Build-Operate-Transfer CFS Container Freight Station CIC Container Imbalance Charge CICT Cai Lan International Container Terminal CMICT Cai Mep–Thi Vai International Terminal CMIT Cai Mep International Terminal CM-TV Cai Mep–Thi Vai C-TPAT Customs-Trade Partnership Against Terrorism CY container yard DWT deadweight tons EDI electronic... particularly critical to certain industries, such as auto manufacturing Vietnam’s trade patterns are concentrated (see table 2.2) The United States, the European Union (EU), China, and Japan account for more than half of the country’s exports major Similarly, China alone accounts for nearly a quarter of Vietnam’s imports Imports from China, the Republic of Korea, Japan, Taiwan, and the EU already represent... investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency (World Bank 201 2a) Vietnam’s ranking compares favorably with that of neighbors Cambodia, Indonesia, the Lao People’s Democratic Republic, and the Philippines, but is below that of China, Malaysia, and Thailand, and the East Asia and Pacific regional average Since the mid-1990s, and particularly over the past... communications ampaign that promotes transparency in supply chain transactions c and engages the BCO and LSP community, whose members in many instances assume that facilitation payments are necessary as a matter of course 3 Plan multimodal transportation infrastructure projects using an integrated corridor approach The execution of transportation infrastructure planning in Vietnam reflects a monomodal approach... Services/DHL Global Forwarding, and Sea-Land Service Ms Isbell holds a B .A from Princeton University Hua Joo Tan is an Independent Maritime Consultant with more than 15 years of experience As a Managing Director of American President Lines (APL) Vietnam, he managed the ocean shipping and supply chain management services of APL and APL Logistics with more than 150 staff in four locations across Vietnam He also... greenhouse gas data along with information to evaluate air quality, traffic, and safety for the Hanoi government As part of a U.S Strategic Highway Research Program project focused on the interactions between transportation capacity, economic systems, and land use, Ms Tao conducted a targeted case study on Global III Intermodal Terminal in Rochelle, Illinois, as well as highway facilities in California, including . EACVF), Carla Teresa Sarmiento (Resource Management Assistant, EAPCA), Iris David (Program Assistant, EASIN), Teresita Ortega (Program Assistant, EASWE), and Cristina Hernandez (Program Assistant,. Director, EASSD), Victoria Kwakwa (Country Director, EACVF), Jennifer Sara (Sector Manager, EASVS), Abhas Jha (Sector Manager, EASIN), and Paul Vallely (Senior Transport Specialist and Transport. transport and logistics in China, Malaysia, and Vietnam. Prior to joining the World Bank he was an Associate with MergeGlobal, a financial and strategic advisor to firms in the global transport and