MSC’s Ambitious Plans for Vietnamese Ports
Swiss-headquartered Mediterranean Shipping Company (MSC) is making headlines with its recent interest in investing in Vietnamese ports. This strategic move was addressed by MSC Group President Diego Aponte during a key meeting in Switzerland with the Vietnam Commission for the Management of State Capital at Enterprises, showcasing the company’s commitment to enhancing Vietnam’s maritime infrastructure.
Collaborative Ventures: Can Gio International Container Port
Aponte revealed that MSC is collaborating closely with the Vietnam Maritime Corporation (VIMC) on the development of the Can Gio International Container Transshipment Port in Ho Chi Minh City. This ambitious project, which is set to revolutionize container transshipment in the region, holds the promise of significant economic benefits for Vietnam.
In 2023, Terminal Investment Limited—a branch of MSC—along with Saigon Port JSC (a VIMC entity), submitted a proposal to the Ministry of Planning and Investment. This proposal outlines plans for the transshipment port, with an estimated investment of $5.5 billion and construction set to commence in 2026. This level of investment indicates confidence in Vietnam’s growing position in global trade.
Expansion into Other Ports: Opportunities on the Horizon
MSC’s vision extends beyond Ho Chi Minh City; it aims to broaden its footprint across Vietnam. The joint venture with VIMC to operate two container terminals at the Haiphong International Gateway Port underlines this ambition. Aponte noted, “The group is considering expanding investments in Vietnam, including a proposal for Danang’s Lien Chieu port,” signaling potential growth in different regions.
In tandem with this growth, MSC is exploring opportunities to invest in other southern ports and establishing modern logistics centers. This is a strategic move aimed at optimizing supply chains and reducing transportation costs, especially as the demand for efficient logistics solutions continues to rise.
Danish Interests: AP Moller Holding’s Perspective
The excitement surrounding Vietnam’s ports is not limited to MSC. Danish conglomerate AP Moller Holding has also expressed a keen interest in investing in deepwater ports and logistics infrastructure across the country. Robert Maersk Uggla, chairman of AP Moller and Maersk, mentioned in a September meeting with Prime Minister Pham Minh Chinh that the company sees vast potential in Vietnam and wishes to contribute to its further development.
Ongoing Developments: APM Terminals’ Initiatives
In March, APM Terminals—a subsidiary of AP Moller—signed a Memorandum of Understanding (MoU) with Hateco Haiphong International Container Terminal for further development in Haiphong. The two companies are jointly investing in two new berths with a combined capacity of 1.8 million TEU (twenty-foot equivalent units) annually, expected to be operational by 2025. This investment further indicates foreign interest in the Vietnamese port sector’s capabilities.
Having submitted an expression of interest for the Lien Chieu Port construction in Danang with a projected cost up to $1.9 billion, APM Terminals embodies the same strategic foresight as MSC.
The Growth of Vietnam’s Port Sector: An Emerging Hub
A recent report from FiinRatings examines the burgeoning potential of Vietnam’s port sector. Remarkably, the compound annual growth rate of seaport throughput has reached 10.3% from 1998 to 2023, fueled by the demand for imports and exports from foreign direct investment firms as manufacturing chains diversify away from China.
Historically, annual growth in seaport throughput has remained robust, with only minor dips attributed to global recessions or the impacts of the COVID-19 pandemic.
Facing Industry Challenges: High Barriers to Entry
Despite the optimistic outlook, navigating the seaport industry in Vietnam comes with significant challenges. High barriers to entry include geographic constraints, reliance on national planning, and the urgent need for substantial upfront capital investment. Establishing strategic partnerships with shipping lines is crucial for the successful launch of any port project.
Market Dynamics: Concentration and Opportunities
The Vietnamese seaport industry is dominated by a few key players. According to Nguyen Nhat Hoang, head of the Corporate Credit Rating Division at FiinRatings, nearly 75% of the market share is concentrated among the three largest enterprises. Container throughput is predominantly held by four companies: Saigon New Port (47%), VIMC (20%), Gemadept (15%), and Viconship (7%).
The gradual decline in financial leverage among seaport companies since 2017, attributed to the completion of major port ventures and improved operating cash flows, speaks to a positive trend. Owning ports across multiple regions allows these companies to expand services within the value chain and ultimately optimize costs based on customer needs and cargo specifics.
Conclusion
While not included in this overview, the developments in Vietnam’s port sector are poised to position the country as a crucial player in Southeast Asia’s maritime landscape. The combination of strategic investments from major global players like MSC and AP Moller, alongside the growth of local companies, promises a dynamic future for Vietnam’s logistics and shipping industry.