Vietnam plans to build a national container shipping operation first in Asia and then global to combat supply chain disruptions. Vietnam is proposing the development of a national container shipping operation to counteract the pandemic’s substantial increase in freight prices and supply chain interruptions. With the help of private financing, the Vietnam Logistics Business Association recently laid out a plan for the development of intra-Asian shipping operations, which would ultimately expand to worldwide operations. Approximately 90% of Vietnam’s import and export volume is moved by sea, with 24 million TEU expected to increase by 7% in 2021.
However, the country’s current fleet has only about a seven percent market share with the rest handed by foreign shipping lines. While Vietnam currently has 10 container shipping companies owning 48 containerships with a total capacity of 39,500 TEU, 13 of the vessels are over 25 years old and 15 of the vessels have a capacity of between 300 and 600 TEU suited only for domestic operations. Only 14 of the ships have a capacity of between 1,000 and 1,800 TEU and can run routes intra-Asia.
One of the industries that they point to as having been hard hit by the dramatic increase in freight rates and capacity constraints is wood exports. The U.S. is Vietnam’s biggest export market for wood and wooden products, accounting for nearly 60 percent of Vietnam’s total wood exports value of $14.8 billion last year. Exports to the U.S. alone rose 22 percent to $8.78 billion in 2021, but high shipping costs reduced profits. The plan calls for the development of logistic services in Vietnam by 2025. The first phase would last three to five years and require approximately $1 billion for ships and a total investment of about $1.5 billion. It would focus on building services intra-Asia with routes to Korea, Japan, China to India, and the Middle East, which accounts for about 60 percent of the country’s import-export volume.
