Deep-water ports in Vietnam are dealing with oversupply and otherchallenges as highlighted in a first ever trade report on Vietnamreleased by Maersk Line on December 10, according to Saigon Times Daily.

“The market is currently plagued by an imbalance insupply and demand,” the liner shipping company said in the Vietnam TradeReport covering the first three quarters of 2013. This report cited theCai Mep International Terminal (CMIT) in Ba Ria-Vung Tau province asone of the ports that copes with this major challenge.

“The CMIT, the closest deep-water port to the manufacturing zones ofsouthern Vietnam and the open seas, presently finds itself in a marketthat is operating at around 30 percent utilization (two million TEUmoves a year), well below its six million TEU capacity. This comparespoorly to terminals in Europe and North America where such utilizationrates are typically well into the 80 percent and 90 percent figures,”the report said.

“The CMIT, along with otherdeep-water ports in Vietnam, is currently grappling with the challengeof oversupply due to the significant flooding of investment into thesector in the mid-2000s.”

Robert Hambleton, generaldirector of the CMIT Co., Ltd., confirmed the current challenge with theDaily after Maersk announced the report. This is one of the majorchallenges that deep-water ports in Vietnam will have to face next year.

“I think it is not going to be much better than 30% next year,” Hambleton said.

In the report, Maersk indicated the pressure for deep-water portsresulted from a delay in closing some of the inner-city terminals of HoChi Minh City and moving the shipping services from these to thenewly-constructed deep-water coastal ports as mapped out in theGovernment’s Port Master Plan.

“As it stands,the deep-water ports are operating with unsustainably low containervolumes. Yet at the same time, the shadow inner city ports continue tooperate, only adding to the challenge of an over-supplied market,” thereport said.

As a consequence, unsustainablepressure was exerted on the pricing for all terminal operators, and theGovernment therefore moved to impose a price floor rate of 46 USD per20-foot-container move.

“The price intervention fromthe Government was necessary in order to safeguard the whole terminalindustry, since the low charges were reaching dangerous levels.Naturally, shipping line customers voiced concerns as their costs haveincreased compared to the past, but we are working with them to ensurethey understand the rationale for this decision,” Hambleton said in thereport.

Despite the challenges, CMIT is confident inVietnam’s long-term potential, and that the oversupply issue will beaddressed given the country’s growth, trade pacts such as theTrans-Pacific Partnership (TPP) and cascading of larger vessels.

Hambleton said as the CMIT currently served the routes linking theU.S., and any partnership that increased trade between Vietnam and NorthAmerica would likely see a need for larger vessels to service thoseroutes.

Maersk expected the TPP would set the pathfor the next phase of Vietnam’s economic opening journey as themanufacturing center of the Pacific Rim. It added that Vietnam’seconomic outlook remained “broadly positive” with a steady flow offoreign direct investment (FDI) and increasing trade volumes.-VNA