At a macro level this invariably means co-ordinating project development so as to achieve the right balance between demand and supply as well as creating the conditions for ‘joined up development’ in terms of port projects and road and rail infrastructure providing efficient access to key markets.
If this doesn’t occur then the results can be too much, too soon in terms of available capacity thus driving pricing down below viable levels. And where ‘joined up development’ does not happen then major traffic congestion and the limiting of positive economic impact due to difficulties in accessing key markets can result.
Vietnam provides a prime example of government getting it wrong. The World Bank, independent analysts and terminal operators alike agree Vietnam’s container terminal operating industry is significantly over-supplied. Many say the main reason behind this problem is that government has failed to deliver on its promise to close down key facilities operated by Ho Chi Minh City port operators once the country’s new deepwater port at Cai Mep at the mouth of the Cai Mep River commenced operation.
Cai Mep port opened for business in 2009 but there has been no sign that Ho Chi Minh port operators will be pressured to close their shallow draft facilities. If a better economic climate were in evidence there may be some movement on this front as they would be able to fully capitalise on the disposal of prime real estate sites.
As a result, the various terminals at Cai Mep are all operating but sustaining big losses due to poor utilisation. Cai Mep International Terminal, which opened for business at the end of last year, is running at 30% of capacity, according to a recent report.
This disastrous situation is in play – with no happy ending in site – as Vietnam’s Ministry of Transport seeks around $32bn in private funding for transportation infrastructure projects through 2020. Will they get it? “How can you trust anything the government tells you so why invest?” as one analyst pointedly underlines.
