Vietnam Sees Surge in Deep-Sea Vessel Capacity Amid Trade Sourcing Shift

  • Vietnam Sees Surge in Deep-Sea Vessel Capacity Amid Trade Sourcing Shift

    Vietnam Sees Surge in Deep-Sea Vessel Capacity Amid Trade Sourcing Shift

    Soaring trade volumes in Vietnam, partly due to manufacturers shifting from China due to Beijing’s tough COVID-19 lockdowns and quarantine restrictions last year, have led to a surge in mainline vessel capacity calling at Vietnam ports.

    Figures specially compiled by British logistics consultant MDS Transmodal for the Journal of Commerce show deep-sea vessel capacity accounted for the majority of ship calls at Vietnam ports for the first time ever last year, overtaking feeder and regional vessel capacity.

    The figures also show Vietnamese ports are seeing faster year-on-year growth in deep-sea capacity than ports in China as carriers add long-haul services as they respond to shipper demand amid a surge in exports from Vietnam.

    About 3.4 million TEU of deep-sea capacity called at Vietnamese ports in the fourth quarter of last year, a 21 percent increase from Q4 2021, according to figures from the MDS Transmodal Containership Databank.

    By comparison, short-sea deployed capacity was 3.2 million TEU in the fourth quarter compared with 2.9 million TEU a year earlier.

    Antonella Teodoro, MDS Transmodal senior consultant, said the deep-sea to short-sea capacity ratio was 51 percent last year, the first time deep-sea deployed capacity had overtaken short-sea traffic.

    She pointed out that 2M alliance carriers Mediterranean Shipping Co. and Maersk have the largest share of deployed capacity calling at Vietnam ports, with each having about 16 percent of the market. But the fastest-growing are non-alliance carriers Zim Integrated Shipping Services and Wan Hai Lines, which increased capacity calling in Vietnam by 32 and 40 percent, respectively, in the fourth quarter compared with a year earlier.

    Teodoro expected that capacity on deep-sea routes would grow further as more goods are made and traded from Vietnam.

    Comparative figures for China show the deep-sea to short-sea capacity ratio at about 71 percent in the fourth quarter, while the capacity growth scheduled to call at Chinese ports was much slower.

    Teodoro said 20.6 million TEU of deep-sea capacity was scheduled to call at Chinese ports in the fourth quarter last year, an increase of just 1.7 percent compared with the 20.3 million TEU scheduled in the fourth quarter 2021.

    Shift continuing into new year

    The shift in capacity has continued in the early weeks of 2023.

    Cosco Shipping Lines has rejigged its America Asia Container service from this month to add extra port calls in Vietnam while cutting the number of calls at Chinese ports. Cosco has added calls at Haiphong in northern Vietnam and Cai Mep near Ho Chi Minh City to its AAC service, while dropping calls at Dalian and Shanghai, the carrier’s sailing schedules show.

    “The AAC service has a deployed fleet of 18 ships each of 10,000 TEU capacity,” Saigon NewPort marketing executive Nguyen Huynh Nhu told the Journal of Commerce.

    Cosco and Orient Overseas Container Line launched their joint AWES/ISE service linking Southeast Asia, India and the US East Coast in early January, which provides a direct link between Cai Mep and New York, Norfolk, and Boston via the Suez Canal. The service, operated by eight ships of about 4,000 TEU capacity, offers a 30-day transit to New York and a 36-day voyage to Boston.

    Peter Sand, chief analyst with online benchmarking platform Xeneta, said the Trump-instigated trade war with China accelerated the trend of increasing container volumes from Vietnam to the US.

    “Vietnam is the clear winner of that game, with alternative Southeast Asia nations lagging behind in terms of US imports,” Sand told the Journal of Commerce. “This trend has prompted carriers to deploy larger vessels on Vietnam origin trade lanes. A tendency that Xeneta expects will continue, with the increased focus on geopolitics and friend-shoring in the coming years.”

    Companies ‘scrambling’ for non-China sourcing

    Highlighting the shift from China, Nguyen Quoc Khanh, Saigon NewPort’s marketing department manager, said the requests the port company receives are invariably the same.

    “Companies, already under pressure from lockdown restrictions which have led to rising production costs in China, are scrambling to identify manufacturers or factories they can work with in Southeast Asian countries, especially Vietnam,” Khanh said. “Logistics networks are being tested like never before.”

    Apple has become the most high-profile company to indicate it was placing less reliance on China as a manufacturing hub with plans to shift a portion of MacBook production to Vietnam later this year. That came after labor unrest at Apple supplier Foxconn’s factory complex in Zhengzhou in central China’s Henen province after authorities imposed tough lockdown measures following a COVID-19 outbreak.

    The move of manufacturing production to Vietnam is reflected in Saigon NewPort’s own throughput figures and the increase in deployed deep-sea capacity shown by the launch of new services.

    Khanh said the company, which operates container terminals in Vung Tau near Ho Chi Minh City and Haiphong in the north plus a network of inland depots and warehouses, handled 9 million TEU last year, up more than 5 percent compared with 2021.

    Provisional figures from Vietnam’s Ministry of Industry and Trade show exports grew about 11 percent to $372 billion last year, of which about 75 percent was generated by foreign-backed firms.

    Khanh said the value of Vietnam’s exports to the US climbed to around $110 billion last year, up more than 18 percent year on year, according to preliminary figures from the country’s General Statistics Office.

    By:  Keith Wallis / JOC

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