In the early 1990’s as part of the city’s plans to reduce congestion, all

the terminals that make up HCMC port were earmarked for progressive relocation outside the city to deepwater facilities. This led ultimately to the current developments taking place in Cai Mep, although the old HCMC city container terminals continue to operate today.

South Vietnam effectively now has four container port groupings: HCMC, Hiep Phuoc and the Thi Vai and Cai Mep clusters. In 2010, Vietnam’s container volumes grew by around 17% to 6.6m teu of which HCMC and Cai Mep handled 4.358m teu, 70% of the country’s total.

The groupings

HCMC comprises five old facilities including those owned and operated by the

Saigon Port and Saigon New Port companies.

Hiep Phuoc comprises one terminal, the Saigon Premier Container Terminal (SPCT) located along the western shore of the Soai Rap River - an 80/20 venture between DP World and the Vietnamese state-owned Tan Thuan Industrial Promotion Company (IPC). SPCT began operations in October 2009 and today its 790,000 teu capacity first phase comprises two berths on 500 m of quay, which will eventually be extended to 950 m. When fully completed, the terminal will have the capacity to handle more than 1.5m teu annually.

Currently, despite the government having allegedly given undertakings to dredge the Saoi Rap River to a depth of 9.5 m, no action has yet been taken but when (if) the dredging is carried out,

it should allow SPCT to serve vessels with a nominal capacity of up to 5,000 teu.

The Thi Vai cluster, southeast of HCMC has two terminals: Saigon International

Terminals Vietnam (SITV) and SP-PSA.. Comprising a 33 ha site, with 730 m of berth, Hutchison Port Holdings (HPH) has a 70% share in SITV which started

36 • CONTAINER MANAGEMENT • September/October 2011

One of the most dynamic container shipping markets in Southeast Asia, Vietnam has attracted significant levels of investment from the major global players with APM Terminals firmly at the forefront, as part of its portfolio expansion strategy reports Sid Cass

Vietnam’s ports: transformation and transition

Reproduced with the permission of CM as published in the September/October 2011 edition

APM Terminals’ CMIT is the leading facility in Ba Ria-Vung Tau province

September/October 2011 • CONTAINER MANAGEMENT • 37

operations in August 2010. Although it has a 14 m depth alongside, the access channel has less than 12 m, since dredging projects have not been extended to the facility.

The SP-PSA terminal is a joint venture between Saigon Port, Vietnam National Shipping Lines (Vinalines) and PSA Vietnam that started operations in 2009 as Vietnam’s first deep-sea container terminal. Strategically located near the mouth of the Cai Mep-Thi Vai River, SP-PSA hopes to become a major hub for regional transhipment activity. The terminal currently has 600 m of berth with 14.5 m water depth (though the access channel is only 12 m), and a further 600 m extension is at the planning stage. When both phases (1,200 m of berths) are fully completed, SP-PSA will have a projected annual capacity of over 2m teu.

The Cai Mep cluster in Ba Ria-Vung Tau province 80 kms southeast of HCMC, comprises three existing terminals (TCCT, TCIT and CMIT) and three terminals currently under construction.

The Tan Cang-Cai Mep Container terminal (TCCT) is wholly-owned by Saigon New Port Company and it began operations in June 2009. TCCT has a total berth length of 300 m and a throughput capacity of 600,000 teu/annum.

Tan Cang–Cai Mep International Container Terminal (TCIT) is a joint venture between Hanjin, MOL, Wan Hai and Saigon Newport. The facility, which has a 14 m depth alongside but only a 12 m access channel, commenced operations in January 2011. TCIT has two berths with a total length of 590 m and 40 ha of container yard, and is equipped with six post-Panamax cranes and 20 RTGs.

In early 2011, APM Terminals opened its Cai Mep International Terminal (CMIT) which is claimed to be the only container facility in Vietnam capable of handling vessels up to 15,000 teu capacity and as a result, it caters for the majority of the country’s Europe/US long haul trades. Representing an investment of around US$270m, CMIT has an annual container throughput capacity of 1.1m teu, with 16.5 m depth alongside and a 14 m channel that is planned to be dredged to 16.5 m in the medium term. Currently equipped with four super post-Panamax container cranes, another on order and the purchase of a sixth crane under review, CMIT also offers more than 36 hectares of container yard.

The terminal is a 49%/51% venture between APM Terminals and local state-owned companies Vietnam

National Shipping Lines (Vinalines) and Saigon Port and it handled its first vessel in March 2011 with the call of the 11,388 teu CMA CGM Columba which to date, is still the largest container vessel to call at a Vietnamese port.

In August, 2011 the 9,038 teu capacity Grete Maersk was the first Maersk Line vessel to call at CMIT on its route from Asia to North America. With this first direct “Transpacific 6” (TP6) call, Maersk Line officially became a business partner of its sister company APM Terminals, one of the three main investors in CMIT.

Meanwhile, US-based operator SSA Marine has invested in the SP-SSA International Container Terminal (SSIT) at Cai Mep. SSIT is a joint venture between Saigon Port, SSA International Holdings – Vietnam and Vinalines. Construction work is now under way on the new 1.2m teu capacity facility, which will have two berths on a 600 m quayline able to accommodate 10,000+ teu vessels (with 600 m allocated as dedicated barge berths). The terminal will have 14 m depth alongside, and will be equipped with four ship-to-shore super post-Panamax container cranes and 16 eRTGs. Operations are scheduled to commence/end 2011/early 2012.

Why are major global operators scrambling to invest in Vietnam’s ports?

Malcolm Gregory, CMIT’s head of marketing reasons that double-digit annual growth

business profile

The 9,038 teu capacity Grete Maersk was the first Maersk Line vessel to call at CMIT

since 2004 has now doubled throughput to more than 4.3m teu and growth is forecast to continue at between 15% and 18% annually to 9m teu by 2015. “This is mainly due to US and European manufacturers and importers diversifying their production and supply lines from China to Vietnam as China becomes increasingly more expensive. Vietnamese labour is highly competitive, intelligent, productive and very resilient: GDP is growing around 7.5% a year and has been for many years despite the global recession and it is a well-balanced market in terms of imports/exports with imports primarily from Asia and

exports to US/Europe,” he said.Until the development of

facilities beyond HCMC no deepsea mainline container vessels were able to call at Vietnam. “Until two years ago, the largest vessels to call at Vietnam were around 1,500 to 1,800 teu whereas today for example, CMIT is now receiving vessels up to 11,500 teu with the potential to handle vessels up to 15,000 teu.,” Gregory added.

Safe investments and political will

Investment in Vietnam seems to be relatively safe although there are still high levels of bureaucracy which can cause frustrations and significant delays. However, according to Gregory, APMT has enjoyed good working relationships with all levels of government, “And any problems that we experience are dealt with to our satisfaction,” he said.

This is a far cry from the mid-early 1990s when the then called P&O Ports International outlined the difficulties of investing in Vietnam, citing that the lead-

time from preparation of tender documents through concession award to eventual start-up was normally between two and three years. Proceedings were often delayed by a combination of lack of confidence on the part of government officials, political considerations, lack of an appropriate legal framework, or simply a lack of will on the part of government to complete the process.

P&O Ports, in fact, was initially invited by The Ho Chi Minh People’s Committee to tender for a joint venture in Ben Nghe Port and was eventually chosen from six bidders after a long period of deliberation. After a year of getting nowhere during which P&O Ports had not even reached the stage of completing the first document, let alone a management contract or joint venture agreement in which ‘unacceptable risks and returns were proposed’, the company cancelled its interest in the concession..

The experience of P&O Ports was not unique, as demonstrated by the Mitsui joint venture in Ho Chi Minh City which overran its budget by two and a half times, due to bureaucratic delays.

“Today’s change in government approach has largely come about through successive governments’ recognition that ports are a strategic necessity and are vital for the future development of the country,” said Gregory. “The need is to reinforce an international perception that inward investments are

safe and that the government must be seen to deliver on its promises that Vietnam is a secure and reputable place in which to do business. If foreign investors are frightened or cannot make a sensible return on their investments there will be no more foreign investment which would be catastrophic for the country.”

Learning curve

“We have been very impressed with the quality of available labour which is educated and hard working and we have been surprised at how easy it has been to find those with the skills and willingness to learn. The crane drivers for example, have been trained in CMIT simulators and at other APMT’s facilities around the region but what we of a certain age have to remember, is that the youngsters of today grow up with electronic games and computers and so forth and they adapt to simulators like ducks to water, unlike some of us oldies, he said”

The biggest problem for APMT is trying to instil safety into the mindset of labour. It is not part of the culture, as can be seen by a walk around any town and observing how people ride their motorbikes or cross the road, for example. “Significant company attention is continually focussed on safety and while there have been no problems or safety issues, it is an aspect that needs constant attention. However, this is more than offset by a lack of labour militancy, flexibility and reliability,” Gregory concluded. n

38 • CONTAINER MANAGEMENT • September/October 2011

business profile

Since 2004 throughput doubled to more than 4.3m teu and 15% and 18% annual growth is forecast to continue to 9m teu by 2015

Malcolm Gregory, CMIT’s head of marketing