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Home > Business/Finance > Diversified Services > Shipping & Logistics
Vietnam Freight Transport Report Q3 2008
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In May 2008, the government approved the establishment of the country’s second private airline, a lowcostcarrier named Air Speed-Up Corp, or ASP. The company was reportedly launched with initial capitalof VND200bn (US$12.5mn), and would aim to lease 10 aircraft by the end of the year, initially focusingon serving the north-south domestic route. The first private airline, Vietjet Aviation, had receivedauthorization in November 2007, with registered capital of VND600bn (US$36.8mn). Ahead of eitherASP or Vietjet launching operations, three carriers currently control the domestic market: state ownedVietnam Airlines (with an 80% market share), Jetstar Pacific Airlines (now a government joint venturewith Qantas of Australia) and Vietnam Air Services (a subsidiary of Vietnam Airlines). According to theCivil Aviation Administration of Vietnam, the market will grow at an annual rate of 12-14% in 2006-2010, and at 9-11% in 2010-2015. Jetstar Pacific was formally launched as a new low cost carrier at theend of May, changing its name from Pacific Airlines. Taking these developments into consideration,along with our projections for the growth of demand, BMI’s newly-released Vietnam Freight Transportreport concludes that airfreight traffic will increase by an annual average of 11.1% in 2008-2012measured in tonnes per km.
A number of factors underpin our optimism. One is the realistic prospect of a long export-led boom inVietnam, with GDP growth likely to average 7.9% in 2008-2012, only fractionally slower than the 8.0%rate achieved 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’slargest airport at Long Thanh in the southern province of Dong Nai, at an estimated cost of nearlyUS$8bn. Noi Bai International in Hanoi will also be modernised, with a new runway and the enlargementof the cargo terminal.
Our overall outlook for the nascent freight transport industry across the different modes is bullish. In roadhaulage, we have trimmed our forecast to take account the effects of high oil prices and continuinginfrastructure bottlenecks. But we still see road-freight turnover running ahead of the general rate ofeconomic expansion in Vietnam. We see it growing by an annual average of 10.3% over the next fiveyears, followed closely by maritime freight (9.9%), pipeline throughput (9.1%) and rail (8.7%). FullWorld Trade Organisation (WTO) membership, achieved in early 2007, can be seen as supportive ofgreater freight transport turnover relative to GDP across all modes, particularly so for shipping. We nowexpect total freight carried growth across all modes, measured in million tonne-km (mntkm), to average9.7% a year in 2008-2012.
Under BMI’s freight transport rating system, Vietnam achieves a composite score of 61.2 out of apotential maximum of 100. Vietnam’s stronger points are freight growth, transport infrastructure growthand the transport intensity index, which measures the dynamism of the country’s foreign trade. BMIviews Vietnam as being weaker in the other four categories: economic and political long-term risks andthe 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 toUS7.5bn in nominal terms by 2012, representing 4.3% of Vietnam’s GDP.
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