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Home > Business/Finance > Diversified Services > Shipping & Logistics
Vietnam Freight Transport Report Q3 2007
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Australia’s Qantas Airways said at the end of April that it had agreed to buy 30% of Pacific Airlines
from the Vietnamese government. Qantas said it had signed a deal with Vietnam's State Capital
Investment Corp. to partner in managing the airline and developing it as a low-cost carrier alongside its
Jetstar operations. Separately Vietnam was expected to issue new regulations allowing foreigners to own
up to 49% of local airlines, according to reports in May. In May 2006, the legislature passed an Aviation
Law allowing locals and foreigners to participate in air transport operations in the country. ‘A new decree
on the law’s implementation which provides detailed guidelines on foreign ownership in domestic
aviation activities is expected to be approved by the prime minister later this year’, an official at the Civil
Aviation Administration of Vietnam said. Taking these developments into consideration, along with the
growth of demand, BMI’s newly-released Vietnam Freight Transport report concludes that airfreight
traffic will increase by an annual average of 12.0% in 2007-2011, measured in tonnes per km.
A number of factors underpin our optimism. One is the realistic prospect of a long export-led boom in
Vietnam, with GDP growth likely to average 8.4% in 2007-2011, up from 7.8% in the preceding five-year
period. Vietnam Airlines is poised for strong growth. Infrastructure plans are also ambitious. 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. Noi Bai International in Hanoi will also be
modernised, with a new runway and the enlargement of the cargo terminal.
Our overall outlook for the nascent freight transport industry across the different modes is bullish. In road
haulage, we have trimmed our forecast to take account the effects of high oil prices and continuing
infrastructure bottlenecks. But we still see road-freight turnover running ahead of the general rate of
economic expansion in Vietnam. We see it growing by an annual average of 10.8% over the next five
years, followed closely by maritime freight (10.4%), pipeline throughput (9.7%) and rail (9.3%). Full
World Trade Organisation (WTO) membership, achieved in early 2007, can be seen as supportive of
greater freight transport turnover relative to GDP across all modes, particularly so for shipping. We now
expect total freight carried growth across all modes, measured in million tonne-km (mntkm), to average
10.2% per annum in 2007-2011.
Under BMI’s freight transport business environment rating system, Vietnam achieves a composite score
of 43 out of a potential maximum of 70. Vietnam’s stronger points are freight growth, transport
infrastructure growth and the transport intensity index, which measures the dynamism of the country’s
foreign trade. BMI views Vietnam as being weaker in the other four categories: economic and political
long-term risks and the country’s regulatory and competitive environment (corruption is a particular
problem).
According to our latest estimates, the total value of transport and communications GDP will rise to
US$5.3bn in nominal terms by 2011, representing 4.3% of Vietnam’s GDP.
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