... of any information hereto contained Vietnam Freight Transport Report Q3 2010 © Business Monitor International Ltd Page Vietnam Freight Transport Report Q3 2010 CONTENTS Executive Summary ... of 6-7% per annum © Business Monitor International Ltd Page Vietnam Freight Transport Report Q3 2010 SWOT Analysis Vietnam Freight Transport Industry SWOT Strengths Weaknesses Opportunities Threats... Monitor International Ltd Page 22 Vietnam Freight Transport Report Q3 2010 Industry Forecast Vietnam' s strong macroeconomic performance has helped the freight transport industry, but the ride
Q3 2010 www.businessmonitor.com VietnaM freight transport Report INCLUDES 5-YEAR FORECASTS TO 2014 ISSN 1750-5364 Published by Business Monitor International Ltd. VIETNAM FREIGHT TRANSPORT REPORT Q3 2010 INCLUDES 5-YEAR FORECASTS TO 2014 Part of BMI's Industry Report & Forecasts Series Published by: Business Monitor International Copy deadline: April 2010 Business Monitor International Mermaid House, 2 Puddle Dock, London, EC4V 3DS, UK Tel: +44 (0) 20 7248 0468 Fax: +44 (0) 20 7248 0467 Email: subs@businessmonitor.com Web: http://www.businessmonitor.com © 2010 Business Monitor International. All rights reserved. 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Vietnam Freight Transport Report Q3 2010 © Business Monitor International Ltd Page 2 Vietnam Freight Transport Report Q3 2010 CONTENTS Executive Summary ......................................................................................................................................... 5 SWOT Analysis ................................................................................................................................................. 7 Vietnam Freight Transport Industry SWOT ........................................................................................................................................................... 7 Vietnam Political SWOT ........................................................................................................................................................................................ 8 Vietnam Economic SWOT ...................................................................................................................................................................................... 8 Vietnam Business Environment SWOT................................................................................................................................................................... 9 Market Overview ............................................................................................................................................. 10 Industry Trends And Developments ............................................................................................................ 12 Multimodal/Logistics ........................................................................................................................................................................................... 12 Road .................................................................................................................................................................................................................... 12 Air ........................................................................................................................................................................................................................ 15 Maritime .............................................................................................................................................................................................................. 15 Global Oil Products Price Outlook ............................................................................................................... 19 Table: Oil Product Price Assumptions, Q409-Q410 (US$/bbl)............................................................................................................................ 21 Table: Oil Product Price Data And Forecasts, 2007-2014 (US$/bbl) ................................................................................................................. 22 Industry Forecast ........................................................................................................................................... 23 Road Freight ........................................................................................................................................................................................................ 23 Air Freight ........................................................................................................................................................................................................... 23 Maritime Freight ................................................................................................................................................................................................. 23 Rail Freight ......................................................................................................................................................................................................... 24 Trade Overview ................................................................................................................................................................................................... 24 Table: Air Freight, 2007-2014 ............................................................................................................................................................................. 24 Table: Maritime Freight, 2007-2014 (throughput, ‘000 tonnes ........................................................................................................................... 25 Table: Rail Freight, 2007-2014 ........................................................................................................................................................................... 25 Table: Road Freight, 2007-2014.......................................................................................................................................................................... 25 Table: Inland Waterway Freight, 2007-2014 ....................................................................................................................................................... 26 Table: Trade Overview, 2007-2014 ..................................................................................................................................................................... 26 Table: Key Trade Indicators, 2007-2014 ............................................................................................................................................................. 27 Table: Main Import Partners, 2002-2008 (US$mn) ............................................................................................................................................. 28 Table: Main Export Partners, 2002-2008 (US$mn) ............................................................................................................................................. 28 Company Profiles ........................................................................................................................................... 29 Doan Xa Port ....................................................................................................................................................................................................... 29 Table: Doan Xa Port's Financial Performance, 2007 And 2008.......................................................................................................................... 30 Vietnam Airlines .................................................................................................................................................................................................. 31 Vietnam Petroleum Transport Jsc (VIPCO)......................................................................................................................................................... 33 Table: Vietnam Petroleum Transport's Key Financial Data, 2007-Q109 ............................................................................................................ 34 BMI Methodology ........................................................................................................................................... 35 How We Generate Our Industry Forecasts .......................................................................................................................................................... 35 Transport Industry ............................................................................................................................................................................................... 35 Sources ................................................................................................................................................................................................................ 36 © Business Monitor International Ltd Page 3 Vietnam Freight Transport Report Q3 2010 © Business Monitor International Ltd Page 4 Vietnam Freight Transport Report Q3 2010 Executive Summary In early March, Vietnam's Prime Minister Nguyen Tan Dung approved VND350trn (US$18.09bn) for the construction and development of the road system in the country. The funds were approved under the development scheme for 2020 and the long-term plan until 2030. The plans include the development of the North-South road with a total length of 3,262km, construction of seven roads in the north with a total length of 1,099km, and the development of seven routes with a total length of 984km in south area. Vietnam has a total road network of 222,000km - the 20th largest globally - although only 19% of it is paved, indicating the poor condition of road infrastructure in the country. Vietnam's Ministry of Transport and Communications has disclosed estimates that it will require close to US$60bn in the period up to 2020 to fund road infrastructure projects. Vietnam's strong macroeconomic performance has helped the freight transport industry, but the ride could get a little bumpy. In BMI's view, the country began emerging from the recession a little too fast in 2009, leading to a growing risk of overheating, rising inflation, and a widening trade deficit. As a result we see something of a 'double dip' scenario with fiscal and monetary tightening on the cards. The macro downside is the danger of policy 'stop-go' and political risk in advance of the 11th National Congress of the Communist Party, due to be held in January 2011. Road building is proceeding at a rapid pace and the number of vehicles in circulation is also expanding sharply as living standards rise and cities expand across Vietnam. Indeed, it can be argued that a large part of the country's economic growth is road-based. After a number of years of double-digit growth, freight carried by road slumped by 8.6% in 2009 to 25.62bntkm. In 2010, we see a moderate recovery of 4.8% to 26.84bntkm. Vietnam's airfreight industry is recovering modestly against the background of a troubled global aviation sector, with negative repercussions from the European volcanic ash crisis also playing a part. In Vietnam itself, the industry is experiencing intense competition, underlined by the launch of a joint venture (JV) backed by Malaysia-based AirAsia. In terms of air cargo volume, BMI sees growth of 3.7% to 125,320 tonnes this year, compared to a contraction of 6.8% in 2009. After suffering two years of falling cargo levels in 2008 and 2009, Saigon New Port (SNP) - the country's largest - is on a recovery phase. Volume slumped 21.2% in 2008 and fell by a further 5.2% to 19.14mn tonnes last year. As the global trade recovery makes itself felt, BMI is forecasting 6.2% growth this year to 20.33mn tonnes. Port of Da Nang (PDN), a smaller facility in central Vietnam, better suited to oceangoing vessels, has on the whole experienced less volatility. Unlike SNP to the south, it suffered only one year of falling cargo levels. Volume handled turned negative only in 2009, falling by a smaller 6.8%. This © Business Monitor International Ltd Page 5 Vietnam Freight Transport Report Q3 2010 year we see throughput at PDN rising by 2.3% to 2.62mn tonnes and thereafter the port should see its volumes growing by 2-3% per annum. Rail freight carried fell by an estimated 6.1% in 2009 and in a similar fashion to other transport modes, is set to experience a partial recovery this year, with growth of 3.2% to 3.907bntkm. Average annual growth over the next five years will be 4.8%, below overall economic growth. This suggests that Vietnam will not be making the most of the potential of rail, one of the most fuel-efficient forms of bulk transport. In recent years, Vietnam has enjoyed strong export led growth but as the internal market gathers pace we expect overall trade growth to ease down. In real terms, exports and imports combined were growing at over 20% per annum earlier this decade, but in the global downturn of 2009 they contracted by 14.5%. This year, we expect total trade to recover with 5.4% growth, followed by 6.2% expansion in 2011. For the rest of our forecast period to 2014, however, trade growth will remain in the relatively slower range of 6-7% per annum. © Business Monitor International Ltd Page 6 Vietnam Freight Transport Report Q3 2010 SWOT Analysis Vietnam Freight Transport Industry SWOT Strengths Weaknesses Opportunities Threats Strong growth rate coupled with geography (a long country stretching for thousands of kilometres on a north-south axis creates a need for long-distance freight haulage). Rapid recovery from 2009 downturn in port throughput volumes in 2010. Location on the South China Sea gives Vietnam access to main inter-Asian shipping routes, as well as access to the developing land transport links with ASEAN countries, allowing the country scope to develop its trade logistics. Generally poor state of road network. Despite new highway construction, only 13.5% of road network is considered in good condition, only 26% has two or more lanes and only 29% is tarred. Traditionally low investment in rail; although attempts are being made to rectify this, the potential of rail for cost-effective bulk freight is being underutilised. Decades of under-investment have left Vietnam with a port infrastructure system at th 99 out of 133 countries in the World Economic Forum Competitiveness Report. The beginnings of local commercial vehicle production will improve the stock of lorries used by road haulage companies. Growing international interest in Vietnam as a growth market in box shipping sector. Opening of deepwater container terminal in May 2009 improved direct shipping links to the US. Potential 'stop-go' in economic growth as the government may be forced to tighten monetary and fiscal policy in response to overheating. State-owned freight firms may be unprepared to compete effectively as the doors are gradually opened for international companies to enter the Vietnamese market. © Business Monitor International Ltd Page 7 Vietnam Freight Transport Report Q3 2010 Vietnam Political SWOT Strengths Weaknesses Opportunities Threats Communist Party appears committed to market-oriented reforms, although specific economic policies will undoubtedly be discussed at the 2011 National Congress. The one-party system is generally conducive to short-term stability. Relations with US are generally improving, and Washington sees Hanoi as a potential ally in South East Asia. Corruption among government officials is threat to legitimacy of Communist Party. Rising (if limited) public dissatisfaction with leadership's tight control of dissent. Government recognises threat corruption poses to its legitimacy, and has acted to clamp down on graft among party officials. Has allowed legislators to become more vocal in criticising government policies. This is opening up opportunities for more checks and balances in the one-party system. The slowdown in growth in 2009 and 2010 is likely to weigh on public acceptance of the one-party system, and street demonstrations to protest economic conditions could develop into a full-on challenge of undemocractic rule. Although strong domestic control will ensure little change to political scene in the next few years, over the longer term, the one-party-state will probably be unsustainable. Relations with China have deteriorated due to Beijing's more assertive stance over disputed islands in the South China Sea and domestic criticism of a large Chinese investment into a bauxite mining project in the central highlands, which could potentially cause widespread environmental damage. Vietnam Economic SWOT Strengths Weaknesses Opportunities Threats One of the fastest-growing economies in Asia in recent years, with GDP growth averaging 7.6% annually between 2000 and 2007. Economic boom has lifted many Vietnamese out of poverty, with the official poverty rate falling from 58% in 1993 to 20% in 2004. Still suffers from substantial trade, current account and fiscal deficits, leaving economy vulnerable as the global economy continues to suffer in 2010. Fiscal picture is clouded by considerable 'off-the-books' spending. Heavily managed and weak dong reduces incentives to improve quality of exports, and also serves to keep import costs high, thus contributing to inflationary pressures. WTO membership has given Vietnam access to foreign markets and capital, while making Vietnamese enterprises stronger through increased competition. In spite of current macroeconomic woes, government will continue market reforms, including privatisation of state-owned enterprises and liberalisation of banking sector. Urbanisation will continue to be a long-term growth driver. The UN forecasts the urban population to rise from 29% of the population to more than 50% by the early 2040s. If government focuses too much on stimulating growth and fails to root out inflationary pressure, it could prolong macroeconomic instability, possibly leading to crisis. Prolonged macroeconomic instability could prompt the authorities to put reforms on hold, as they struggle to stabilise the economy. © Business Monitor International Ltd Page 8 Vietnam Freight Transport Report Q3 2010 Vietnam Business Environment SWOT Strengths Weaknesses Opportunities Threats Large, skilled, low-cost workforce has made the country attractive to foreign investors. Location (proximity to China and South East Asia and its good sea links) makes it a good base for foreign companies to export to the rest of Asia, and beyond. Weak infrastructure. Roads, railways, ports inadequate to cope with economic growth. 120 out of 180 countries in Transparency International’s 2009 Corruption Perceptions Index. Increasingly attracting investment from key Asian economies, such as Japan, South Korea and Taiwan. This offers possibility of transfer of high-tech skills and knowhow. Privatisation of state companies and liberalisation of banking sector should offer foreign investors new entry points. Ongoing trade disputes with US, and general threat of US protectionism. Labour unrest is a lingering threat. A failure by the authorities to boost skills levels could leave Vietnam a second-rate economy for an indefinite period. th © Business Monitor International Ltd Page 9 Vietnam Freight Transport Report Q3 2010 Market Overview In January 2007, Vietnam officially joined the World Trade Organisation (WTO), an event seen as an important milestone in the country's closer integration into the global economy. WTO membership has helped boost Vietnam's international trade and develop its freight transport capabilities. Road transport is the most advanced in terms of freight sector privatisation and is the dominant mode for freight, with a market share of around 60% of domestic cargo. There are over 1,050 enterprises registered in the road transport business, which include 16 state-owned enterprises (SOEs), 233 limited liability companies, 350 private companies and 450 joint stock companies. Very few foreign-invested companies are present. Most road transport companies are of small or medium size, and each company, on average, owns about 50 vehicles. In addition, tens of thousands of individual household businesses exist that operate informally in the road freight sector, and are thus difficult to account for and monitor. Vietnam has a national road network of some 93,300km. Of this, only 23,418km, or 25%, is paved. In addition, recent surveys indicate that approximately 40% of the network is in poor to very poor condition and will require substantial investment even to reach a maintainable condition. Vietnam's railway transport sector has only one operator, namely the Vietnam Railway Corporation (VRC), established by law in April 2003 as a state corporation operating railway transport and related services. The government has announced plans to separate the management of rail infrastructure from passenger and cargo services. Vietnam's rail network totals 2,600km (excluding sidings). The network is mixed-gauge, comprising 2,169km of 1.000m gauge and 178km of 1.435m gauge. The network has 1,790 bridges totalling 45km and 11.5km of tunnels. The principal axis is Hanoi-Ho Chi Minh City (1,726km). Other lines emanating from Hanoi are to Hai Phong (102km), Lao Cai (296km) and Dong Dang (162km). There are two principal airlines operating in Vietnam: Vietnam Airlines and Pacific Airlines. Both of these airlines are majority state owned, although Australia's Qantas is now a minority shareholder in Pacific Airlines. The government has announced plans to build the country's largest airport at Long Thanh in the southern province of Dong Nai, at an estimated cost of US$8bn. The authorities also plan to expand Noi Bai International airport in Hanoi. The three major airports handling freight are located at Ho Chi Minh City, Hanoi and Da Nang, each of which have international connecting flights. Minor airports such as Cat Bi at Haiphong are generally used for domestic flights to the three larger hubs. Vietnam's shipping fleet statistics indicate that by the end of 2002, the country had 819 vessels with a total capacity of 2.123mn DWT and ranked 60th out of 150 countries around the world (but fourth in ASEAN after Singapore, Malaysia and Thailand). The average vessel size is 2,650DWT. Currently, there are more than 400 ships with a capacity below 1,000DWT that operate on domestic routes. © Business Monitor International Ltd Page 10 Vietnam Freight Transport Report Q3 2010 Vietnam's fleet structure lacks specialised container vessels, bulk cargo ships, large oil and liquefied petroleum gas (LPG) tankers. Multi-function ships and bulk cargo ships account for 87% in number and 63% in tonnage, and container ships account for only 2.2% in number and 9% in tonnage. The largest local operator is the Vietnam National Shipping Lines (Vinalines). Vietnam's dense river and canal network provides the country with a highly developed inland waterway system. This is the second-largest sub-sector involved in domestic cargo transport, accounting for 25-30% of total transport volumes. Currently, the inland waterway transport sub-sector is managed by two state corporations affiliated to the Ministry of Transport, one SOE affiliated to the Vietnam Inland Waterway Authority, and some enterprises managed by other ministries, operating in support of the power generation, cement and paper industries. In addition, there are about 230 co-operatives and hundreds of inland waterway transport enterprises in the country. Vietnam's seaport network comprises many small- and medium-sized entities, with inefficient distribution. Most big ports are located far inside rivers, like Hai Phong and Ho Chi Minh City, with limited depth at the entrance. Some ports are located in big cities, thus making it difficult to connect with other modes of transport for cargo transfer from and to ports, due to traffic congestion. Except for several new ports or upgraded ports, most ports have been operating for many years, lack investment and are seriously degraded. The loading and unloading equipment in some ports is obsolete, leading to low productivity. The average productivity of a Vietnamese port is only 2,500 tonnes/m per wharf, or 40-50% of productivity of other ports in the region. © Business Monitor International Ltd Page 11 Vietnam Freight Transport Report Q3 2010 Industry Trends And Developments Multimodal/Logistics Kerry Logistics launched the first phase of its new logistics centre in Danang in central Vietnam, it was reported in April. The facility is scheduled to be fully completed in H210 and will cover an area of nearly 9,000m2. The new facility will complement the company's existing 62,500m2 facility in Ho Chi Minh City and a 10,300m2 facility in Hanoi. This will enable the company to provide complete coverage in north, central and south Vietnam. Kerry Logistics primarily offers integrated logistics, international freight forwarding and supply chain solutions with headquarters in Hong Kong. It operates a total area of more than 1.7mn m2 and provides services in 24 countries. The company maintains a fleet of nearly 5,600 vehicles and a staff of more than 10,000. In early March, France-based tyre manufacturer Michelin appointed Denmark-based logistics group Damco to provide logistics and customs clearance services in Vietnam. The contract is applicable for three years and will enable Damco to manage Michelin's exports from Thailand into Vietnam, as well as inland transportation, cross-docking and distribution to customers in Vietnam. Damco will also supervise Michelin's warehouse operations in Hanoi and Ho Chi Minh City. The contract will facilitate Michelin to distribute directly to nearly 100 dealers throughout the country. Industry observers believe the contract will improve trade prospects for Damco and contribute to the company's trade and financial position. Road South Korean steel producer POSCO Engineering and Construction (POSCO E&C) was in late March seeking approval from Vietnam's transport ministry for its expressway investment project, reported Dau Tu. The project involves construction of a 97km-long six-lane expressway from Nghi Son Dist in Thanh Hoa province to Hong Linh Dist in Ha Tinh province. The company will work with local partners of state-owned Vietnam Expressway Investment and Development Company (VEC) to secure funds of about VND25.29trn (US$1.33bn) for the public private partnership (PPP) project. Vietnam's road network is in poor condition. Vietnam's Ministry of Transport and Communications has disclosed estimates that it will require close to US$60bn in the period up to 2020, to fund road infrastructure projects. South Korean company Keangnam Enterprises won two contracts related to A4 and A5 sections of the Noi Bai-Lao Cai Highway project in Vietnam, it was reported in March. The company secured the contracts from VEC. The A4 package, worth VND1.64trn (US$87.79mn), includes the construction of a 30km-long four-lane expressway in the provinces of Phu Tho and Yen Bai. The VND1.98trn (US$106mn) A5 package is for the construction of 41.5km-long four-lane expressway in Yen Bai province. Both are expected to be finished within 36 months. © Business Monitor International Ltd Page 12 Vietnam Freight Transport Report Q3 2010 In early March, Vietnam's Prime Minister Nguyen Tan Dung approved VND350trn (US$18.09bn) for the construction and development of the road system in the country. The funds were approved under the development scheme for 2020 and the long term plan until 2030. The plans include the development of the North-South road with a total length of 3,262km, construction of seven roads in the north with a total length of 1,099km, construction of three routes with a total length of 264km in central and highland areas, and the development of seven routes with a total length of 984km in south area. Vietnam has a total road network of 222,000km - the 20th largest globally - although only 19% of it is paved, indicating the poor condition of road infrastructure in the country. Vietnam's Ministry of Transport and Communications has disclosed estimates that it will require close to US$60bn in the period up to 2020 to fund road infrastructure projects. The transportation department of Hanoi in Vietnam proposed the construction of six overhead roads between 2010 and 2015. The road projects are expected to cost more than VND32trn (US$1.65bn). The overhead roads would cover: Lac Long Quan - Yen Phu road; Nga Tu So - Nga Tu Vong - Minh Khai Vinh Tuy bridge road; Noi Bai - Mai Dich - Phap Van; Hanoi Rail Station - Xa Dan - Pham Ngoc Thach Ton That Tung - Kim Giang-road 70; Tran Duy Hung - Lieu Giai - West Lake; and, Giang Vo - Lang Ha - Thanh Xuan. Vietnam was due to start construction of a 220km long coastal road in March 2010. The road, which will run through Kien Giang and Ca Mau provinces, is expected to cost US$440mn. The governments of South Korea and Australia and the Asian Development Bank (ADB) will co-operate on the road project. The road will be a part of the 1,000km-long link known as the Thailand-Cambodia-Vietnam Southern Coastal Road Corridor. The ADB believes that the new road, which will traverse poor regions in the three countries, will enhance social and economic development of those regions. The increased traffic levels in Vietnam's urban areas and the country's general fast-paced economic development have increased the volume of exports and imports to and from the country, thus creating a pressing need for better infrastructure between ports and inland. Vietnam has a total road network of 222,000km - the 20th largest globally - although only 19% of it is paved, indicating the poor condition of road infrastructure in the country. It was announced in February, Japan's government would increase its participation in co-financing infrastructure projects in Vietnam, as part of a wider venture to spearhead the involvement of Japanese companies in the development of infrastructure in the region. The Japanese government earmarked JPY75bn (US$822mn) for three infrastructure projects in Vietnam, according to a report by the Japanese daily newspaper Nikkei. The three projects would be developed by Japanese companies. The three projects are: the construction of a water system in Hanoi by NGK Insulators and Metawater, a subsidiary of Fuji Electric Holdings; installation of communications systems on the trunk highway between Hanoi and HCM City by Central Nippon Expressway; and, construction of a biomass power plant near HCM City by J-Power. © Business Monitor International Ltd Page 13 Vietnam Freight Transport Report Q3 2010 According to the report in Nikkei, the Japanese government will offer export credit guarantees to the Japanese companies to insure against payment irregularities by the host governments/entities. The Japanese government has spearheaded the expansion of Japanese companies abroad, especially in Asia, through establishing relations with governments. Being the second largest donor of official development assistance after the United States, Japanese loans have played a significant role in financing infrastructure projects in Asia. The influence that the Japanese government has established in the Asia Pacific region has enabled the overseas expansion of Japanese companies. Vietnam is a case in point. Japanese companies and development bodies (JICA mainly) have been highly active in Vietnam. The flagship project that Japan has managed to become involved with is the planning of the high speed railway in Vietnam. With the surge in investments in Vietnam's infrastructure sector, Japanese companies certainly have much to look forward to in the country. According to BMI forecasts, infrastructure will account for the largest share of total construction industry value, its share rising from an estimated 45% in 2009 to 51.5% in 2014. Furthermore, according to our forecasts, infrastructure industry value will register robust growth in the coming years. The infrastructure industry value was an estimated VND46trn (US$2.4bn) in 2009 and this is forecast to rise to VND134trn (US$7.8bn) by 2014 - an average annual real growth of almost 15%. However, it should be noted that there have been sour moments in the relations between Japan and Vietnam during their JV in infrastructure. Taisei Corporation and Kajima Corporation were banned from participating in road and bridge construction projects in Vietnam for one year (until June 2010) because of involvement with the Can Tho Bridge, which collapsed in September 2007, killing 52 people. Bloomberg quotes Tran Quoc Viet, the director of quality control at the Ministry of Transport, who said that 'this is punishment for the Japanese companies'. According to Bloomberg, the bridge collapsed owing to 'unforeseen weaknesses of the two concrete supports on either side that collapsed causing the bridge to fall'. Taisei and Kajima spokespeople have confirmed that they received notice of temporary suspension on June 20 2009. Vietnam was in January seeking loans from the World Bank (WB) and the Japan International Cooperation Agency (JICA) to finance the construction of an expressway costing US$2.5bn, reported The Saigon Times Daily. The 130km-long expressway, will connect Danang City to Quang Ngai Province. Work would be carried out by the state-owned Vietnam Expressway starting in 2010. JICA is expected to fund a 65km-long section from Danang City to Tam Ky in Quang Nam Province. The WB is expected to fund the remaining 66km-long stretch from Tam Ky to Quang Ngai Province. Vietnam's Transport Ministry approved the term-end report for the Ben Luc-Long Thanh highway project, reported Intellasia. The project, involving investments of US$1.7bn, will be carried out by the state-owned Vietnam Expressway Investment and Development Company (VEC). The 58km-long highway will have four lanes totalling 27.5m in width. VEC, the main investor, is considering acquiring loans from the Asian Development Bank (ADB) and using its counterpart capital to finance the project. © Business Monitor International Ltd Page 14 Vietnam Freight Transport Report Q3 2010 Air Vietnam Airlines (VNA) registered a 2.3% year-on-year (y-o-y) increase in cargo throughput to 131,220 tonnes in 2009. The airline reported a 13% y-o-y increase in domestic airfreight traffic to 87,000 tonnes. VNA expects a turnover of VND32trn (US$1.78bn) in 2010, with a profit US$8.3mn - 30% higher than 2009's turnover of US$1.36bn and 42% less than 2008's profit of US$14mn. VNA plans to triple its existing aircraft fleet of 50 by 2020. VNA was established as a state-owned airline in 1989 and merged with a number of service companies in 1996 to give it its present form. The airline operates 64 routes to 20 domestic and 24 international destinations. The carrier provides passenger air services to 25 destinations in 15 countries. Its cargo operations serve 20 destinations in Asia, the Middle East, Australia and Europe, with partner networks serving other destinations. Maritime Vietnam suspended a contract with China State Construction Engineering Corporation (CSCEC) due to its presence on the World Bank's list of ineligible firms. Vietnam has benefitted substantially from World Bank support over recent years and made the move to protect funding from the institution. CSCEC was awarded an US$60.6mn contract to dredge and upgrade the Bhieu Loc-Thi Nghe Canal in 2006 - a project funded by the World Bank. However, this contract was subsequently suspended according to the director of the Ho Chi Minh City environment project management unit, Phan Hoang Dieu, quoted in a report by the German Press Agency, DPA. CSCEC was put on the World Bank's list of debarred firms, which contains companies which are not eligible to bid for World Bank-funded projects. The project ran into trouble in November 2009. Following delays in the project, CSCEC was given an extension to the original deadline. However, when the deadline expired in February 2010, the World Bank stated that it would not approve new funding for the project if CSCEC was the contractor. Consequently, although CSCEC carried out around 70% of the project, it has now been taken off the project. The contract was due to be retendered via an international bidding process, with the canal now due to be finished in 2011. CSCEC was one of seven firms which incurred sanctions by the World Bank in January 2009, following a collusion scandal in the Philippines. The seven firms, from both China and the Philippines, were debarred after the World Bank's Integrity Vice Presidency uncovered evidence of a cartel made up of both local and international firms. According to a press release from the World Bank, the sanctioned companies 'participated in a collusive scheme designed to establish bid prices at artificial, non-competitive levels and to deprive the borrower of the benefits of free and open competition'. The cartel bid for contracts for phase one of the Philippines National Roads Improvement and Management Program (NRIMP 1). CSCEC was subsequently debarred for five years, expiring January 12 2015. The move will protect Vietnam's ability to receive funds from the World Bank. The institution has been a major support to Vietnam's infrastructure sector, helping to finance investments where funding may otherwise not have been available. In the last five years (2005-2009), the World Bank has granted loans © Business Monitor International Ltd Page 15 Vietnam Freight Transport Report Q3 2010 worth US$4,760mn to Vietnam for projects and US$915mn has already been allocated for 2010. Infrastructure has received around US$2bn of funding between 2005 and 2009, including energy and mining. Vietnam National Shipping Lines (Vinalines) said in March that it was planning to continue its recent fleet expansion programme with the acquisition of 40 new-build vessels. The purchase is likely to depend on the government supporting the programme through the provision of state funding. According to Seatrade Asia, Vinalines was targeting expenditure of US$2bn on new ships, which will be built at Vietnamese yards. The expansion aims to increase the company's fleet from 2.7mn deadweight tonnes (DWT) to 6-7mn DWT by 2015. Vinalines is Vietnam's largest commercial shipping line, comprising, in terms of capacity, about 45% of the country's total fleet. In 2006, the government approved a US$1.8bn expansion programme to expand the company's fleet to 136 ships or 2.6mn tonnes of capacity by 2010 by building and purchasing new vessels. The growth of Vietnam's maritime sector coincides with the expansion of the country's trade network; Vietnam joined the World Trade Association in 2007 and since then total trade has shown strong growth, expanding by 22.1% and 11.4% y-o-y in 2007 and 2008 respectively before declining by 14.5% in 2009. With a recovery in imports and exports expected in 2010 (forecast at 4% and 5% respectively by BMI), demands on the country's freight transport sector are expected to increase over the next few years. The success of the company's latest expansion programme, however, will depend on its ability to source additional government funding, which, given the country's current economic situation, may prove difficult. While the state has indicated its intention to promote the growth of its trade sector, it faces growing pressure to tame public spending in the wake of a rising budget deficit. Strong growth in consumer spending has stoked imports, and the country's trade deficit is estimated by BMI to have reached 13.3% of GDP in 2009. In our view, the government is currently prioritising the development of its infrastructure sector above its shipping fleet, which in terms of size ranks some way below other Asian states. According to an estimate by law firm Dwayne Morris, government expenditure on infrastructure will comprise 11% of GDP a year over the next few years. Vietnam's shipping sector has suffered from a lack of investment and is underdeveloped in relation to those of several other Asian nations. According to data provided by UNCTAD, the Capacity of Vietnam's fleet was 3.14mn DWT in 2007, making it the 11th largest national fleet in the Asia Pacific region and less than half the size of that registered under the Philippines, which has a comparable population. Besides much-needed development of the country's shipping fleet, BMI believes the expansion would also greatly benefit the country's nascent shipbuilding sector. The industry, in our view, is well placed for growth given its greater competitiveness against markets such as Japan and South Korea and a potential US$2bn order would be a significant coup for the shipyards. The Vietnam Coal and Mineral Group (Vinacomin), Vietnam National Oil and Gas Group (PetroVietnam) and Electricity of Vietnam (EVN) were likely to put forward a joint proposal to the © Business Monitor International Ltd Page 16 Vietnam Freight Transport Report Q3 2010 Vietnamese government to set up a coal import steering committee, it was reported at the beginning of March. The move is aimed at avoiding coal scarcity in the country which is expected to affect power generation in the near future. The groups said the usage of coal for power generation purposes is rapidly increasing in the country. Tran Xuan Hoa, Vinacomin's general director, said that coal demand in Vietnam is estimated to increase to 11.4mn tonnes in 2010 and 63.2mn tonnes in 2015 and further to 196mn tonnes in 2020. He added that the country needs to import nearly 100mn tonnes of coal by 2020 in order to meet such huge demand. In early 2010, Dubai Ports World (DP World) officially opened a new container terminal at the Vietnamese Port of Saigon. BMI expects Vietnam's ports sector to experience strong growth as international shipping lines warm to the opportunities presented by the country's growing export sector. Phase one of DP World's Saigon Premier Container Terminal (SPCT) was completed in October 2009. The terminal has two berths and 15,000 20-foot equivalent units (TEUs) of storage capacity. The initial berthing depth at the terminal is 9.5m, allowing it to accommodate ships with a capacity of 4,000TEUs. Additional dredging is expected to increase the depth at SPCT to 12m by 2015. The terminal is reported to have cost US$360mn to build, with investment provided by DP World and local operator Tan Thuan Promotion Company (IPC). As demand for container shipping increases, Vietnam's port sector continues to attract foreign investors. Throughput at the country's container ports increased by 500% between 1998 and 2008, which alerted the government to the need for further investment in the sector to keep up with future demand. The Vietnam Maritime Administration (Vinamarine), cited by Lloyd's List, has outlined the need for US$20-25bn to be invested by 2020. Much of this is expected to come from the private sector, and, in particular, international operators. SPCT follows the inauguration of the country's first deepwater container port at the Cai Mep terminal complex at Ho Chi Minh City's Saigon New Port, which opened in May 2009. The deepwater facilities have led to the opening of the first direct shipping routes between Vietnam and the US west coast. International shipping lines have been drawn by the opportunities presented by Vietnam's growing manufacturing sector, while increased trade links between South East Asian states may also see Vietnamese ports become regional transhipment hubs. BMI expects international investment in Vietnam's maritime sector to continue to grow over the next few years. We believe significant outside investment will be necessary if the sector is to raise the US$25bn needed to increase capacity to the levels required to meet the demands of the country's growing exports sector. BMI's country risk analysts forecast Vietnam's exports to grow by 5% y-o-y in 2010, after which they are expected to grow by an average of 7.35% a year between 2011 and 2014. Vietnam's Prime Minister Nguyen Tan Dung approved the Viet Nam Seaport Development Master Plan in January 2010, which will require a total investment of VND360-440trn (US$19.5-23.8bn) by 2020. © Business Monitor International Ltd Page 17 Vietnam Freight Transport Report Q3 2010 The plan aims to increase the transportation capacity of the country by 500-600mn tonnes goods by 2015, 900-1,000mn tonnes by 2020 and 2,100mn tonnes by 2030. The primary focus of the plan will be the international transit port Van Phong in Khanh Hoa Province, development of the Lach Huyen seaport complex in Hai Phong, and a seaport at the Nghi Son oil refinery from now to 2015. Though Vietnam has 266 ports, the majority of maritime infrastructure is outdated and has barely any support infrastructure to transport goods from the port to the rest of the country. The increased traffic levels in Vietnam's urban areas and the country's general fast-paced economic development have increased the volume of exports and imports to and from the country, thus creating a pressing need for better infrastructure between ports and inland. The new master plan will improve the port infrastructure in the country. © Business Monitor International Ltd Page 18 Vietnam Freight Transport Report Q3 2010 Global Oil Products Price Outlook Driving Slowly Although products market conditions improved in the first quarter of 2010, the higher prices and wider refining margins should not be interpreted as the beginnings of a sustained recovery. The absolute increases in products demand outside key developing countries cannot support improved fundamentals. Extended refinery downtime on the part of more astute operators has distorted the picture, along with unusual weather factors. With inventories still alarmingly high, the outlook remains challenging. The rest of the year is likely to be characterised by continuing stock surpluses and narrow refining margins. Demand growth, particularly for jet and diesel, needs to be strong and sustained if the products markets are to stage a convincing recovery. Otherwise, rising crude costs and weak product demand imply more misery. Toyota problems aside, the automotive industry faces a tough time ahead as scrappage schemes become a fond memory. It is unlikely to be a good year in terms of vehicle sales, while existing car, truck and aeroplane owners will be tempted to use them less thanks to higher fuel costs. Demand destruction seen in 2008 may be about to re-appear as pump prices soar and corporate and consumer incomes remain under pressure. The US-based Energy Information Administration (EIA) forecasts that regular-grade gasoline retail prices will average US$2.92 per gallon during the summer, up from US$2.44/gallon in the equivalent period of 2009. This is an increase of nearly 20% that will anger most motorists and could dampen enthusiasm for long journeys during the so-called 'driving season'. Those owners of sports utility vehicles (SUVs) who did not take advantage of 2009's 'cash for clunkers' programme may still want to switch to economic hybrids or sub-compacts, as the EIA predicts US pump prices exceeding US$3/gallon at times during the driving season. Summer diesel averaging US$2.97/gallon in 2010 will not please truck drivers either, as they paid only US$2.46/gallon in the summer of 2009. The EIA states that, during this summer season, motor gasoline consumption will increase by just 0.5% over the 2009 level. This modest improvement compares unfavourably with the summer of 2009, which saw a 0.9% bounce in demand thanks largely to a US$1.37/gallon year-on-year (y-o-y) fall in gasoline prices. This year's predicted US$0.50 increase may prove conservative, and the demand estimate could prove optimistic. Total US gasoline stocks at the onset of the driving season (using April 1 as the start-date) were 224mn barrels (bbl), according to EIA data. This is 7mn bbl above the April 1 2009 level and 11mn bbl above the five-year average for the same date. Subdued demand bodes ill for the US inventory trend. US distillate © Business Monitor International Ltd Page 19 Vietnam Freight Transport Report Q3 2010 inventories are projected to start the summer season at 143.1mn bbl, almost matching 2009's record 143.6mn bbl, and 24mn bbl above the previous five-year average. US refining margins widened in March, with those on the Gulf Coast averaging almost a dollar more than the US$5.18/bbl seen in February. In Europe, refining economics also improved compared with earlier months, and margins for Brent crude in Rotterdam rose from US$2.75/bbl in February to almost US$3.30/bbl in March. In Asia, refining margins gained more than in the Atlantic Basin, with Singapore Dubai crude margins soaring from US$1.35 to US$3.73/bbl in March. April prices and margins appear to be holding up but the return of refining capacity from maintenance during May could boost supply, and the ongoing addition of Asian capacity could weaken the local as well as global market. If gasoline demand is subdued in the summer, hampered by ample stocks, we are likely to see a return to margin misery for most refiners. Revised Forecasts BMI estimates that the global wholesale price for premium unleaded gasoline was US$87.61/bbl in Q110. This compares with US$81.41/bbl in Q409. Gasoline prices in Q110 were up 68% from US$52.22/bbl in the equivalent period of 2009. For 2010 as a whole the BMI assumption for gasoline is an average of US$96.83/bbl, with the price expected to peak in July at more than US$105/bbl. We forecast the overall y-o-y rise in 2010 gasoline prices at 38%. In Q110 gasoil averaged US$84.12/bbl, based on a composite global price. This represents a y-o-y rise of almost 54%. For 2010 as a whole we forecast an average price of US$92.45/bbl, probably peaking in December 2010 at more than US$100/bbl. The full-year outturn represents a 37% increase from the 2009 level. Jet prices averaged US$86.37/bbl in Q110, using the composite for New York, Singapore and Rotterdam. The y-o-y increase was just over 52%, with jet lagging behind the gain in gasoil prices. Quarter-onquarter (q-o-q) the Q110 increase was just 3.6%. For full-year 2010 we forecast US$95.58/bbl, up from US$70.66/bbl in 2009. In 2009 naphtha was a surprisingly robust performer among the major refined products, gaining 92% between January and December. In Q110 naphtha averaged US$79.30/bbl, compared with US$73.44/bbl in Q409 and US$42.83/bbl in Q109. We put the 2010 average naphtha price at US$82.46/bbl, up 39% yo-y. Thanks to the stirring of petrochemicals demand in Asia, naphtha looks set to be the star performer in 2010. © Business Monitor International Ltd Page 20 Vietnam Freight Transport Report Q3 2010 Looking further ahead, we see gasoline prices rising further to US$99.17/bbl in 2011 and stabilising at around US$105/bbl from 2012. Gasoil is expected to climb to US$94.69/bbl in 2011, reaching a plateau of just over US$100/bbl from 2012. The price of jet is forecast to average US$97.88/bbl in 2011 before levelling out at just under US$104/bbl from 2012. Table: Oil Product Price Assumptions, Q409-Q410 (US$/bbl) Gasoline Q409 Q110e Q210f Q310f Q410f Rotterdam premium unleaded 82.09 87.78 102.31 102.95 99.21 NY Harbour unleaded 81.66 86.59 100.46 103.74 102.76 Singapore premium unleaded 80.48 88.45 94.55 100.37 92.83 Global average 81.41 87.61 99.11 102.35 98.27 Rotterdam 80.92 83.77 92.93 97.59 97.82 Mediterranean 81.27 83.81 91.8 96.70 97.26 Singapore 81.79 84.77 90.91 97.82 94.26 Global average 81.33 84.12 91.88 97.37 96.45 Rotterdam 83.40 86.01 96.89 99.86 100.82 NY Harbour 83.90 87.90 96.56 102.92 105.59 Singapore 82.75 85.20 91.50 98.26 95.41 Global average 83.35 86.37 94.98 100.35 100.61 Gasoil Jet/kerosene e/f = estimate/forecast. Source: BMI © Business Monitor International Ltd Page 21 Vietnam Freight Transport Report Q3 2010 Table: Oil Product Price Data And Forecasts, 2007-2014 (US$/bbl) Gasoline 2007 2008 2009 2010f 2011f 2012f 2013f 2014f Rotterdam premium unleaded 75.75 100.12 70.60 98.06 100.43 106.34 106.34 106.34 NY Harbour unleaded 78.75 102.54 69.70 98.39 100.76 106.69 106.69 106.69 Singapore premium unleaded 74.98 102.64 70.21 94.05 96.32 101.99 101.99 101.99 Global average 76.49 101.77 70.17 96.83 99.17 105.00 105.00 105.00 Rotterdam 77.02 122.62 68.74 93.03 95.27 100.88 100.88 100.88 Mediterranean 77.69 121.75 69.13 92.39 94.62 100.19 100.19 100.19 Singapore 77.03 119.53 69.01 91.94 94.16 99.70 99.70 99.70 Global average 77.24 121.30 68.96 92.45 94.69 100.26 100.26 100.26 Rotterdam 81.13 126.61 70.81 95.89 98.21 103.99 103.99 103.99 NY Harbour 82.48 127.13 71.18 98.24 100.62 106.53 106.53 106.53 Singapore 79.17 121.11 69.99 92.59 94.83 100.40 100.40 100.40 Global average 80.93 124.95 70.66 95.58 97.88 103.64 103.64 103.64 Gasoil Jet/kerosene f = BMI forecast. Source: 2000-2006 historical data: EIA. 2007/2008 historical data: IEA © Business Monitor International Ltd Page 22 Vietnam Freight Transport Report Q3 2010 Industry Forecast Vietnam's strong macroeconomic performance has helped the freight transport industry, but the ride could get a little bumpy. In BMI's view the country began emerging from recession a little too fast in 2009, with growing risk of overheating, rising inflation and a widening trade deficit. As a result, we see something of a ‘double dip’ scenario with fiscal and monetary tightening on the cards. After GDP growth of 5.5% in 2009, we predict a slower rate of expansion this year, at 4.4%. A key issue will be availability of inward investment to boost transport infrastructure. The downside is a danger of policy ‘stop-go’ and political risk in the run up to the 11th National Congress of the Communist Party in January 2011. Road Freight Road building is proceeding at a rapid pace, and the number of vehicles in circulation is also expanding sharply as living standards rise and cities expand across Vietnam. Indeed, it can be argued that a large part of the country's economic growth is road-based. After a number of years of double-digit growth, freight carried by road slumped by 8.6% in 2009 to 25.62bntkm. In 2010, we see a moderate recovery of 4.8% to 26.84bntkm. Thereafter, however, road freight growth will gather pace, averaging 6.7% per annum in the five years to 2014. This rate will exceed the average for GDP growth (5.9%), a pattern consistent with this stage of Vietnam's industrialisation process. Air Freight Vietnam's airfreight industry is recovering modestly against a backdrop of a troubled global aviation sector, with negative repercussions from the European volcanic ash crisis also playing a part. In Vietnam the industry is experiencing intense competition, underlined by the launch of a joint venture (JV) backed by Malaysia-based AirAsia. In terms of air cargo volume, BMI sees growth of 3.7% to 125,320 tonnes this year, compared to contraction of 6.8% in 2009. Over the 2010-2014 forecast period tonnage growth will average 5.3%, just below Vietnam’s rate of economic expansion. In terms of freight carried (volume x distance), we expect to see growth of 3.3% this year to 280.96mntkms, after a fall of 6.2% last year. Maritime Freight After suffering two years of falling cargo levels in 2008 and 2009, Saigon New Port (SNP), the country's largest, is on a recovery phase. Volume slumped 21.2% in 2008 and fell by a further 5.2% to 19.14mn tonnes last year. As the global trade recovery makes itself felt, BMI forecast 6.2% growth this year to 20.33mn tonnes. Thereafter we see SNP achieving 7-8% annual tonnage growth through the rest of the forecast period. It will not be until 2013, however, that volumes come back up to 2007 levels. In 2014 SNP should handle 27.69mn tonnes a year. Port of Da Nang (PDN), a smaller facility in central Vietnam, better suited to ocean-going vessels, has on the whole experienced less volatility. Unlike SNP to the © Business Monitor International Ltd Page 23 Vietnam Freight Transport Report Q3 2010 south, it suffered only one year of falling cargo levels. Volume handled turned negative in 2009, falling by a smaller 6.8%. In 2010 we see throughput at PDN up 2.3% to 2.62mn tonnes and the port should see its volumes growing by 2-3% per annum. By 2014 PDN will move just under 3mn tonnes. Rail Freight Rail freight carried fell by an estimated 6.1% in 2009 and in a similar fashion to other transport modes, is set to experience a partial recovery this year, with growth of 3.2% to 3.907bntkm. Average annual growth over the next five years will be 4.8%, below overall economic growth. This suggests that Vietnam will not be making the most of the potential of rail, one of the most fuel-efficient forms of bulk transport. In volume terms, freight carried by rail will recover by a modest 4.0% this year to 7.041mn tonnes. Trade Overview In recent years, Vietnam has enjoyed strong export led growth but as the internal market gathers pace we expect overall trade growth to ease down. In real terms, exports and imports combined were growing at over 20% per annum earlier this decade, but in the global downturn of 2009 they contracted by 14.5%. In 2010, we expect total trade to recover with 5.4% growth, followed by 6.2% expansion in 2011. For the rest of our forecast period to 2014, however, trade growth will remain in the relatively slower range of 67% per annum. In nominal terms, exports will grow 6.2% this year to US$62.2bn, while imports, held back by the expected credit and fiscal tightening, will expand by a slower 3.4% to reach US$74.2bn. Total trade in value terms will be up 4.6% to US$136.3bn. Vietnam's principal export commodities are crude oil and manufactured goods. The country's main imports are machinery and equipment. Vietnam's main export partners are the US, Japan, Australia, China and Germany. The country's main sources for imports are China, Singapore, Japan, South Korea and Thailand. Vietnam's geographic position on the South China Sea allows the country access to the main transpacific and intra-Asian shipping routes, enabling the country to meet its trading needs. Table: Air Freight, 2007-2014 Air freight, ‘000 tonnes – % change y-o-y Air freight, mn tonnes/km – % change y-o-y 2007 2008 2009e 2010f 2011f 2012f 2013f 2014f 129.60 129.70 120.90 125.32 131.73 139.11 147.33 156.15 7.28 0.08 -6.78 3.65 5.12 5.60 5.91 5.98 279.90 290.00 271.98 280.96 294.03 309.06 325.79 343.74 3.90 3.61 -6.21 3.30 4.65 5.11 5.42 5.51 e/f = estimate/forecast. Source: General Statistics Office of Vietnam © Business Monitor International Ltd Page 24 Vietnam Freight Transport Report Q3 2010 Table: Maritime Freight, 2007-2014 (throughput, ‘000 tonnes 2007 2008 2009e 2010f 2011f 2012f 2013f 2014f 25,600 20,180 19,140 20,330 21,844 23,581 25,564 27,692 – % change y-o-y 28.00 -21.17 -5.15 6.22 7.45 7.96 8.41 8.32 Port of Da Nang 2,737 2,742 2,556 2,615 2,688 2,771 2,865 2,967 – % change y-o-y 15.43 0.19 -6.78 2.31 2.76 3.08 3.41 3.54 Port of Ho Chi Minh City (Saigon New) e/f = estimate/forecast. Source: Port authority Table: Rail Freight, 2007-2014 Rail freight, ‘000 tonnes – % change y-o-y Rail freight, mn tonnes/km – % change y-o-y 2007 2008 2009e 2010f 2011f 2012f 2013f 2014f 9,050.00 8,426.90 6,769.01 7,041.51 7,437.93 7,893.85 8,401.53 8,946.00 -1.13 -6.89 -19.67 4.03 5.63 6.13 6.43 6.48 3,882.50 4,027.60 3,783.57 3,907.83 4,088.61 4,296.52 4,528.04 4,776.33 12.65 3.74 -6.06 3.28 4.63 5.09 5.39 5.48 e/f = estimate/forecast. Source: General Statistics Office of Vietnam Table: Road Freight, 2007-2014 Road freight, ‘000 tonnes – % change y-o-y Road freight, mn tonnes/ km – % change y-o-y 2007 2008 2009e 2010f 2011f 2012f 2013f 2014f 403,362 443,294 406,894 424,740 450,702 480,560 513,809 549,466 19.12 9.90 -8.21 4.39 6.11 6.62 6.92 6.94 24,646.9 28,023.5 25,622.4 26,844.8 28,623.1 30,668.2 32,945.6 35,388.0 20.01 13.70 -8.57 4.77 6.62 7.15 7.43 7.41 e/f = estimate/forecast. Source: General Statistics Office of Vietnam © Business Monitor International Ltd Page 25 Vietnam Freight Transport Report Q3 2010 Table: Inland Waterway Freight, 2007-2014 2007 2008 2009e 2010f 2011f 2012f 2013f 2014f 135,283 137,177 128,189 132,905 139,767 147,659 156,447 165,871 10.00 1.40 -6.55 3.68 5.16 5.65 5.95 6.02 22,235.6 22,680.3 21,500.9 22,097.8 22,966.1 23,964.8 25,076.8 26,269.5 18.00 2.00 -5.20 2.78 3.93 4.35 4.64 4.76 Inland waterway freight, ‘000 tonnes – % change y-o-y Inland waterway freight, mn tonnes/km – % change y-o-y e/f = estimate/forecast. Source: General Statistics Office of Vietnam Table: Trade Overview, 2007-2014 2007 2008 2009e 2010f 2011f 2012f 2013f 2014f Imports, real growth, % y-o-y 28.32 11.92 -14.00 4.00 6.00 6.50 6.50 6.50 Exports, real growth, % y-o-y 15.58 10.85 -15.00 7.00 6.50 7.00 8.00 8.00 Total trade, real growth, % y-o-y 22.11 11.42 -14.46 5.37 6.23 6.73 7.20 7.20 Imports, US$bn 65.99 85.21 71.73 74.15 81.48 91.24 104.56 119.19 – % change y-o-y 38.52 29.14 -15.82 3.37 9.89 11.98 14.59 13.99 Exports, US$bn 54.71 70.33 58.56 62.16 68.61 77.17 89.62 103.54 – % change y-o-y 21.97 28.57 -16.74 6.15 10.37 12.48 16.13 15.53 120.69 155.55 130.29 136.32 150.09 168.41 194.18 222.73 30.49 28.88 -16.23 4.62 10.11 12.20 15.30 14.70 Total trade, US$bn – % change y-o-y e/f = estimate/forecast. Source: General Statistics Office of Vietnam, BMI © Business Monitor International Ltd Page 26 Vietnam Freight Transport Report Q3 2010 Table: Key Trade Indicators, 2007-2014 Agricultural raw materials Exports, US$mn – % change y-o-y Imports, US$mn – % change y-o-y 2007 2008 2009e 2010f 2011f 2012f 2013f 2014f 2,077.97 1,759.75 1,249.52 1,449.27 1,684.58 1,791.60 1,947.23 2,121.27 28.28 -15.31 -28.99 15.99 16.24 6.35 8.69 8.94 2,488.39 2,105.10 1,501.41 1,556.88 1,724.94 1,948.66 2,253.90 2,589.35 45.05 -15.40 -28.68 3.70 10.79 12.97 15.66 14.88 265.92 197.58 156.44 184.33 209.68 216.97 227.57 239.43 -2.87 -25.70 -20.82 17.83 13.75 3.48 4.89 5.21 1,822.59 1,353.51 1,074.18 1,117.05 1,246.89 1,419.74 1,655.59 1,914.76 -2.62 -25.74 -20.64 3.99 11.62 13.86 16.61 15.65 308.31 230.42 183.88 195.30 215.73 242.87 282.32 326.45 -2.62 -25.26 -20.20 6.21 10.46 12.58 16.25 15.63 3,339.39 2,493.26 1,975.82 2,046.34 2,259.98 2,544.37 2,932.40 3,358.81 -2.81 -25.34 -20.75 3.57 10.44 12.58 15.25 14.54 25,486.7 31,433.3 26,952.9 28,323.7 30,777.0 34,034.2 38,771.2 44,068.6 25.18 23.33 -14.25 5.09 8.66 10.58 13.92 13.66 38,953.9 49,985.9 42,252.6 43,641.1 47,847.3 53,446.6 61,086.6 69,482.2 30.84 28.32 -15.47 3.29 9.64 11.70 14.29 13.74 11,296.6 15,040.9 10,037.2 11,934.4 12,457.6 13,413.2 13,992.5 14,640.3 16.35 33.15 -33.27 18.90 4.38 7.67 4.32 4.63 7,541.02 10,224.4 6,688.45 7,929.15 8,543.87 9,463.71 10,422.0 11,475.2 12.57 35.58 -34.58 18.55 7.75 10.77 10.13 10.10 Ores and metals Exports, US$mn – % change y-o-y Imports, US$mn – % change y-o-y Iron and steel Exports, US$mn – % change y-o-y Imports, US$mn – % change y-o-y Manufactured goods Exports, US$mn – % change y-o-y Imports, US$mn – % change y-o-y Fuel Exports, US$mn – % change y-o-y Imports, US$mn – % change y-o-y e/f = estimate/forecast. Source: BMI © Business Monitor International Ltd Page 27 Vietnam Freight Transport Report Q3 2010 Table: Main Import Partners, 2002-2008 (US$mn) 2002 2003 2004 2005 2006 2007 2008 Mainland China 2158.84 3138.55 4595.10 5899.70 7391.30 12502.00 17592.90 Singapore 2533.49 2875.82 3618.40 4482.30 6273.90 7608.60 9617.87 Japan 2504.65 2982.06 3552.60 4074.10 4702.10 6177.70 8614.94 South Korea 2279.60 2625.44 3359.40 3594.10 3908.40 5334.00 6089.65 955.24 1282.19 1858.60 2374.10 3034.40 3737.20 5458.74 Thailand Source: IMF’s Direction of Trade Statistics Table: Main Export Partners, 2002-2008 (US$mn) 2002 2003 2004 2005 2006 2007 2008 United States 2,453.15 3,939.56 5,024.80 5,924.00 7,845.10 10,089.10 12,594.10 Japan 2,436.96 2,908.60 3,542.10 4,340.30 5,240.10 6,069.80 8,264.30 Australia 1,328.33 1,420.86 1,884.70 2,722.80 3,744.70 3,556.90 4,466.29 Mainland China 1,518.33 1,883.12 2,899.10 3,228.10 3,242.80 3,356.70 4,174.25 729.03 854.71 1,064.70 1,085.50 1,445.30 1,855.10 2,714.70 Germany Source: IMF’s Direction of Trade Statistics © Business Monitor International Ltd Page 28 Vietnam Freight Transport Report Q3 2010 Company Profiles Doan Xa Port Strengths Given Vietnam's strong growth record in recent years and the country's sharply increasing foreign trade, the port sector is expected to remain broadly profitable. Weaknesses Global trade can fluctuate and, as seen with the 2009 recession, fall in absolute terms, exposing Doan Xa to cyclical downturns. Opportunities Haiphong's strategic location means Doan Xa can benefit from growing trade with China (it is close to Hong Kong, Macau, Kunming and Guangzhou). It also can act as an eastern port for Myanamar and Laos. Threats The port handles frozen foodstuffs and so is at risk of a loss of business during health scares such as the H1N1 'swine flu' scare of April/May 2009. Company Overview Doan Xa Port Joint Stock Company is a Vietnam-based port operation company in Hai Phong. It mainly manages operations at Doan Xa Port, and provides port services, including loading/discharging cargo, warehousing, inland transportation and shipping agency. The company also offers minor supporting services, such as customs declaration, the wholesaling of handling machinery, and construction and maintenance of marine infrastructure. The company is an affiliate of Vietnam National Shipping Lines (Vinalines). Financial Performance DXP, listed on the Hanoi Stock Exchange, was targeting a pretax profit of VND45bn (US$2.35mn) on revenues of VND120bn, and a dividend payout equivalent to VND3,500/share in 2010, Vietnam News Briefs reported at the end of March. The company expected to achive a total production value of VND3.5trn during the year. DXP made a net profit of VND61.12bn on revenues of VND151.88bn in 2009, the company said on its website, giving no other comparative figures. Source: Vietnam News Briefs (March 31 2010) Latest Activity In June, Doan Xa Port moved its stock exchange listing from the Ho Chi Minh City Stock Exchange (HoSE) to the Hanoi Securities Trading Centres (HaSTC) because it was unable to meeting the new minimum capital requirement for the southern bourse. It was one of 21 companies that decided to move their listings to the HaSTC. The move came because under a government decree, companies listed on the HoSE with a charter capital of less than VND80bn were required to either increase their capital or move to the Hanoi Bourse. Source: Vietnam News Briefs (June 2009) Prior Activity Thousands of frozen food containers imported for re-export were stuck at several ports in the northern city of Hai Phong, with unconfirmed reports saying importers were baulking at accepting shipments based on swine flu fears, Thanh Nien reported in early May. The containers, stocking frozen chicken legs, pig stomachs and beef were lying at the Dinh Vu Port in Hai Phong City. Air conditioners had to be run around the clock to prevent the food from spoiling. 'We can't receive any more cargo as we are already stocked with five times our storage capacity. The cost of power for storing the frozen food containers has gone skyhigh,' said Nguyen Ngoc Hong, director of the port. Hong added he was very worried that © Business Monitor International Ltd Page 29 Vietnam Freight Transport Report Q3 2010 owners of those containers might abandon the goods if the cost exceeds the shipment's value. Chua Ve Port, one of the city's largest ports, shared Dinh Vu's plight, with nearly 1,000 frozen food containers stuck at the port. 'Customers keep asking to delay exporting while others seek permission to import,' said Vu Nam Thang, director of the port's cargo handling agency. Frozen food imported for the domestic market was also stuck at the city's ports. 'We have just received two frozen food containers imported for domestic markets, which had struggled to find a port to unload', said Vu Tuan Duong, director of the Doan Xa Port. 'But both have to be moved out of the port within two days as we are already overloaded'. Duong showed Thanh Nien text messages local food importers sent to his cell phone, asking to postpone their shipments' delivery dates. Source: Thanh Nien (May 2009) Table: Doan Xa Port's Financial Performance, 2007 And 2008 2007 2008 Q408 Net profit margin, % 30.79 30.79 35.14 Operating margin, % 33.67 33.67 37.67 EBITD margin, % 48.46 48.47 na Return on average assets, % 26.68 26.68 31.45 Return on average equity, % 41.00 41.00 46.31 na na 291 No. of employees na = not available. Source: Company data, Google Finance © Business Monitor International Ltd Page 30 Vietnam Freight Transport Report Q3 2010 Vietnam Airlines Strengths The national carrier in a high-growth country set in a high-growth region, with rising living standards set to boost demand for air travel at a proportionately greater rate than GDP growth. Weaknesses To maintain market share in a dynamic but toughly competitive market, the company must gain professional skills and expertise, and a flow of new investment, at an accelerated rate. Any slippage is likely to have an immediate negative impact on margins. Opportunities Developing the regional passenger market in Asia is Vietnam Airlines' main opportunity, with cargo business as a second revenue stream. Threats The main threat is regulatory - that the government will open up the industry at a faster pace, not giving the airline the necessary time to prepare for competition with private sector start-ups or established foreign carriers. Company Overview Vietnam Airlines was established as a state-owned airline in 1989 and merged with a number of service companies in 1996 to give it its present form. The government's stated goal is to further integrate the company into the global market and establish itself as a regional player. Vietnam's national carrier operates 64 routes to 20 domestic and 24 international destinations. Its fleet of 50 modern aircraft have carried more than 9mn passengers. In 2006, it was officially accepted as a full member of the International Air Transport Association. The Vietnamese carrier provides passenger air services to 25 destinations in 15 countries including many in South-East Asia, Australia, Russia, France, Germany and the US. The company has a number of codeshare operations with foreign companies, in particular the February 2004 agreement with Air France to share 11 non-stop scheduled flights between Ho Chi Minh City and Paris. Vietnam Airlines' cargo operations serve 20 destinations in Asia, the Middle East, Australia and Europe, with partner networks serving other destinations. The cargo division operates a JV with Singapore Airport Terminal Service - Tan Son Nhat Cargo Services - that has an annual cargo throughput of 100,000 tonnes. Financial Performance The national flag carrier Vietnam Airlines expected to see a total revenue of VND32trn (US$1.78bn) this year, up 30% against last year in the context of the global economic recovery, Asia Pulse news agency said. To realise the turnover, the carrier estimated that it would have to transport more than 11mn passengers in 2010. This year's positive targets are based on its good performance last year which was in marked contrast to many airlines globally facing bankruptcy, losses and laying-off of staff. The carrier notched up VND24.5trn (US$1.36bn) in turnover last year with the company netting a profit of VND150bn (US$8.3mn). The results mainly stemmed from its focus on the domestic market. It opened a series of new routes last year, including Ha Noi-Can Tho, Ha Noi-Quy Nhon, HCM City-Dong Hoi, Ha Noi-Tuy Hoa, and Ha Noi-Pleiku. Vietnam Airlines transported about 9.3mn passengers last year, a 6.6% increase from last year, with Vietnamese clients accounting for up to nearly 6.2mn, a y-o-y increase of 17.6%. It also handled around 131,220 tonnes of cargo, up 2.3% from last year. Of the total, 87,000 tonnes of cargo was transported on domestic routes, a rise of nearly 13%. The carrier also reported a seat occupancy rate of roughly 74% for both local and international flights. To raise net profits, Vietnam Airlines implemented a wide range of © Business Monitor International Ltd Page 31 Vietnam Freight Transport Report Q3 2010 solutions to cut fees, thus saving more than VND400bn (US$22.2mn) last year, by economising fuel and rescheduling flights, it said. The airline took full advantage of the global economic crisis to negotiate with partners to buy and lease more new planes to improve its fleets and remodel infrastructure to capitalise on opportunities that have opened with the recovery of the local and international economy. Besides success in the domestic market, Vietnam Airlines saw certain achievements overseas. The airline also co-operated with the Cambodia Government to jointly operate National Cambodia Angkor Air from July 2009, as well opening the Ha Noi-Fukuoka route last October. It also took over from Japan Airlines the Ha Noi-Kansai route in January 2010 with five flights a week. Source: Asia Pulse (January 15 2010) Latest Activity In early April, the Ministry of Transport approved a request from private airline VietJet Air to sell a 30% equity stake to Malaysia-based AirAsia as part of a deal to set up a budget airline in Vietnam called Vietjet-AirAsia, rejecting opposition from Vietnam Airlines, the state-run Vietnam News Agency said. Earlier Vietnam Airlines had requested that the ministry should not approve the sale, arguing that market entry by foreign carriers might threaten the newlyestablished domestic airlines, according to reports carried by state media. Deputy Minister of Transport Pham Quy Tieu had sent a written document to the Government Office analyzing the proposed equity sale. In line with the Enterprise Law, the Law on Investment, the Civil Aviation Law, and Decree No 76 on Air Transport Business Activities, foreign investors are allowed to invest in the domestic aviation industry. The 2006 Viet Nam Civil Aviation Law and Decree No 7 stipulate that foreign ownership in a carrier should not exceed 30%. VietJet-AirAsia was scheduled to start operations in May, flying to both domestic and international destinations. Source: Vietnam News Briefs (April 5 2010) Prior Activity On January 26, Vietnam Airlines opened its first European representative office in Paris to expand its reach on the continent and prepare for joining SkyTeam, the worlds second largest airline alliance, Asia Pulse news agency said. The office will take charge of managing, supervising and assisting branches, representative offices, agencies and agents in dealing with business issues in all of Europe, with the exception of Russia. Chief of the Representative Office Le Dung said that over the last year, revenues from flights to and from the European region accounted for nearly 20% of the airline's total turnover. Duong Tri Thanh, Vietnam Airlines deputy general director, said the system of flight routes to Europe played a critical role in the company's operations. Europe is a market with great potential, alongside Japan and the Republic of Korea, especially as the airline was set to join SkyTeam this June, he added. The company plans to add one additional weekly flight to its services to France and Germany. Present at the event were the Vietnamese ambassador to France, Le Kinh Tai, and the chairman of Vietnam Airlines, Nguyen Si Hung. Source: Asia Pulse (January 28 2010) © Business Monitor International Ltd Page 32 Vietnam Freight Transport Report Q3 2010 Vietnam Petroleum Transport Jsc (VIPCO) Strengths At this stage in its economic development, Vietnam will require rapidly increasing import volumes of oil, gas and certain petrochemicals, as well as extra export capacity. VIPCO is well positioned in a high-growth segment of the shipping market. Weaknesses The global economic downturn of 2009, accompanied by lower oil prices and sharply lower shipping freight rates, posed a serious challenge to profitability. Opportunities Tanker rates have been less hard hit by the downturn than dry bulk, meaning that Vipco may be well advised to focus on improving market share within its existing segment, rather than diversifying. Threats Vipco has a privileged position as a subsidiary of the state oil company. Any change to this role for regulatory reasons could therefore be a threat, implying potential loss of secure contracts. Company Overview Vietnam Petroleum Transport Joint Stock Company (Vipco) specialises in marine transportation. It mainly offers marine transportation services, freight forwarding, shipping brokerage, customs clearance and port operation. Other activities include merchandise of petroleum, liquefied gas and petrochemicals; trading supplies and equipment, manning and warehousing; and minor industrial construction. The company has five subsidiaries and one affiliate, and is itself a subsidiary of Vietnam National Petroleum Corporation. Financial Performance Vipco said it would issue VND300bn (US$15.7mn)-worth of corporate bonds to raise fund for its projects this year, Vietnam News Briefs reported in March. Vipco said it would also sell apartments in the Anh Dung VII project, liquidate three existing ships to raise more funds, using the proceeds to increase registered capital to VND200bn and to buy a 30,000-DWT ship. Vipco would contribute VND17.5bn to acquire a 35% stake in VP Petrochemical Transport JSC, and to guarantee a loan from PG Bank and Indovina-bank for the firm. The company planned to pay an interim cash dividend of VND600/share from April 20, Vipco said in a statement on its website. In 2010, Vipco said it was aiming for a net profit of VND70bn, including higher income from seaport and real estate projects, Chairman Nguyen Dao Thinh said at a seminar earlier in March. It was investing in three buildings worth a combined VND800bn, a VND3trn Dinh Vu port complex in Haiphong and a deep-water port worth VND1.4trn to be opened by the end of 2010. Source: Vietnam News Briefs (March 23 2010) Latest Activity Vipco would complete an export dock at its petrochemical container port complex project in the northern city of Haiphong on April 30, Vietnam News Briefs reported. The dock will be able to receive 1,000-DWT ships, the Thoi bao Kinh te online newspaper said. Vipco will also speed up building of a petroleum import dock, which will be capable of receiving 40,000-DWT ships, in the first quarter of 2010 as part of the project. The company has carried out site clearance for a container port in the city. Earlier, Vipco said it would invest VND2.8trn (US$151.52mn) in the 40-hectare complex. Source: Vietnam News Briefs (January 20 2010) Prior Activity Vipco will invest VND2.8trn (US$157.3mn) in building a petrochemical and container port complex in the northern port city of Haiphong, local media reported, according to Vietnam News Briefs (VNB). The 40-hectare complex will consist of a petrochemical port with loading © Business Monitor International Ltd Page 33 Vietnam Freight Transport Report Q3 2010 3 capacity of 150,000m and a container port with loading capacity of 150,000 TEU. Vipco was seeking a foreign partner to build and develop the complex. Currently, an international seaport group and a leading industrial group in Japan are interested in the complex. The complex is undergoing site clearance. Vipco expects to put it into service during 2011. Source: Vietnam News Briefs (October 6 2009) Table: Vietnam Petroleum Transport's Key Financial Data, 2007-Q109 2007 2008 Q109 Net profit margin, % 6.16 5.90 12.75 Operating margin, % 6.30 6.03 12.75 19.48 18.51 na Return on average assets, % 4.88 4.91 7.43 Return on average equity, % 9.19 9.55 13.50 na na 486 EBITD margin, % No. of employees na = not available. Source: Company data, Google Finance © Business Monitor International Ltd Page 34 Vietnam Freight Transport Report Q3 2010 BMI Methodology How We Generate Our Industry Forecasts BMI’s industry forecasts are generated using the best-practice techniques of time-series modelling. The precise form of time-series model we use varies from industry to industry, in each case being determined, as per standard practice, by the prevailing features of the industry data being examined. For example, data for some industries may be particularly prone to seasonality, i.e. seasonal trends. In other industries, there may be pronounced non-linearity, whereby large recessions, for example, may occur more frequently than cyclical booms. Our approach varies from industry to industry. Common to our analysis of every industry, however, is the use of vector autoregressions. Vector autoregressions allow us to forecast a variable using more than the variable’s own history as explanatory information. For example, when forecasting oil prices, we can include information about oil consumption, supply and capacity. When forecasting for some of our industry sub-component variables, however, using a variable’s own history is often the most desirable method of analysis. Such single-variable analysis is called univariate modelling. We use the most common and versatile form of univariate models: the autoregressive moving average model (ARMA). In some cases, ARMA techniques are inappropriate because there is insufficient historic data or data quality is poor. In such cases we use either traditional decomposition methods or smoothing methods as a basis for analysis and forecasting. It must be remembered that human intervention plays a necessary and desirable part in all our industry forecasting techniques. Intimate knowledge of the data and industry ensures we spot structural breaks, anomalous data, turning points and seasonal features where a purely mechanical forecasting process would not. Transport Industry There are a number of principal criteria that drive our forecasts for each transport variable: GDP Growth As transport activity is heavily influenced by real GDP growth, this factor is examined to ascertain its relationship with overall trade volumes. Projected GDP growth is calculated using BMI’s own macroeconomic and demographic forecasts. © Business Monitor International Ltd Page 35 Vietnam Freight Transport Report Q3 2010 Real Trade Volumes The sum of imports and exports plays a particularly important role in developing countries with a small domestic industrial sector. In particular, the focus is on goods, as services do not employ transport. The volumes are forecast based on the following criteria: Trends manifested through historical data; The impact of future step changes to the economy (such as future membership of the EU or some other regional body). Port Traffic Port traffic levels act as a ‘second opinion’ on trade volumes. However, this check needs to be used with caution, as trade values and volumes do not always move over time in the same way. Market Share The market share of each mode (road, rail, inland waterway, coastal shipping) for future years is based upon: Trends in historical modal split data; Evidence of government policy favouring one or more modes over others; Government and or private sector investment plans in specific modes. Sources Sources used in Freight Transport reports include local transport ministries, officially released company results and figures, established think tanks and institutes and donor agencies such as the World Bank and the Asian Development Bank. © Business Monitor International Ltd Page 36 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. [...].. .Vietnam Freight Transport Report Q3 2010 Market Overview In January 2007, Vietnam officially joined the World Trade Organisation (WTO), an event seen as an important milestone in the country's closer integration into the global economy WTO membership has helped boost Vietnam' s international trade and develop its freight transport capabilities Road transport is the most advanced in terms of freight. .. significant coup for the shipyards The Vietnam Coal and Mineral Group (Vinacomin), Vietnam National Oil and Gas Group (PetroVietnam) and Electricity of Vietnam (EVN) were likely to put forward a joint proposal to the © Business Monitor International Ltd Page 16 Vietnam Freight Transport Report Q3 2010 Vietnamese government to set up a coal import steering committee, it was reported at the beginning of March... and Germany Present at the event were the Vietnamese ambassador to France, Le Kinh Tai, and the chairman of Vietnam Airlines, Nguyen Si Hung Source: Asia Pulse (January 28 2010) © Business Monitor International Ltd Page 32 Vietnam Freight Transport Report Q3 2010 Vietnam Petroleum Transport Jsc (VIPCO) Strengths At this stage in its economic development, Vietnam will require rapidly increasing import... project © Business Monitor International Ltd Page 14 Vietnam Freight Transport Report Q3 2010 Air Vietnam Airlines (VNA) registered a 2.3% year-on-year (y-o-y) increase in cargo throughput to 131,220 tonnes in 2009 The airline reported a 13% y-o-y increase in domestic airfreight traffic to 87,000 tonnes VNA expects a turnover of VND32trn (US$1.78bn) in 2010, with a profit US$8.3mn - 30% higher than 2009's... average productivity of a Vietnamese port is only 2,500 tonnes/m per wharf, or 40-50% of productivity of other ports in the region © Business Monitor International Ltd Page 11 Vietnam Freight Transport Report Q3 2010 Industry Trends And Developments Multimodal/Logistics Kerry Logistics launched the first phase of its new logistics centre in Danang in central Vietnam, it was reported in April The facility... Jet/kerosene f = BMI forecast Source: 2000-2006 historical data: EIA 2007/2008 historical data: IEA © Business Monitor International Ltd Page 22 Vietnam Freight Transport Report Q3 2010 Industry Forecast Vietnam' s strong macroeconomic performance has helped the freight transport industry, but the ride could get a little bumpy In BMI's view the country began emerging from recession a little too fast in 2009,... 325.79 343.74 3.90 3.61 -6.21 3.30 4.65 5.11 5.42 5.51 e/f = estimate/forecast Source: General Statistics Office of Vietnam © Business Monitor International Ltd Page 24 Vietnam Freight Transport Report Q3 2010 Table: Maritime Freight, 2007-2014 (throughput, ‘000 tonnes 2007 2008 2009e 2010f 2011f 2012f 2013f 2014f 25,600 20,180 19,140 20,330 21,844 23,581 25,564 27,692 – % change y-o-y 28.00 -21.17... 30,668.2 32,945.6 35,388.0 20.01 13.70 -8.57 4.77 6.62 7.15 7.43 7.41 e/f = estimate/forecast Source: General Statistics Office of Vietnam © Business Monitor International Ltd Page 25 Vietnam Freight Transport Report Q3 2010 Table: Inland Waterway Freight, 2007-2014 2007 2008 2009e 2010f 2011f 2012f 2013f 2014f 135,283 137,177 128,189 132,905 139,767 147,659 156,447 165,871 10.00 1.40 -6.55 3.68 5.16 5.65... protect Vietnam' s ability to receive funds from the World Bank The institution has been a major support to Vietnam' s infrastructure sector, helping to finance investments where funding may otherwise not have been available In the last five years (2005-2009), the World Bank has granted loans © Business Monitor International Ltd Page 15 Vietnam Freight Transport Report Q3 2010 worth US$4,760mn to Vietnam. .. Nang (PDN), a smaller facility in central Vietnam, better suited to ocean-going vessels, has on the whole experienced less volatility Unlike SNP to the © Business Monitor International Ltd Page 23 Vietnam Freight Transport Report Q3 2010 south, it suffered only one year of falling cargo levels Volume handled turned negative in 2009, falling by a smaller 6.8% In 2010 we see throughput at PDN up 2.3% to