Vietnam advised to heed advice on port operations

At the 11th Asean Ports and Shipping Conference in Ho Chi Minh City July 11-12, Accenture, a global management consulting, technology services and outsourcing company, identified five key emerging trends that could help Vietnam.

Won-Joon Lee, Accenture’s Asia-Pacific managing director for automotive, industrial equipment, infrastructure and transportation said that Accenture has two offices in Vietnam. “We are here this week to meet with industry and business leaders to share our research on the port industry and see how we can participate in the growing economy”. 

Hong Kong-based Fox Chu, Accenture’s director for port industry, Asia Pacific, said the five trends were dynamic supply chain, impact of automation technology, economic volatility, reduced time for profit maximisation, and talent shortage and immobility.

As for supply chain, he said regional port operators needed to become more customer-centric businesses that could flexibly respond to the needs of shipping lines for a lower cost. They should streamline operations and offer more personalized services for shippers to increase customer loyalty.

Meanwhile, productivity can be increased by 30 per cent through automation, Chu said. As for the third trend, he said uncertain economic conditions required port operators to create agile and streamlined businesses.

For profit maximisation, he stated that port operators need scalable business models to weather a negative cash flow period and speed up the scalability of a business to capitalise on the short profit-making period.

He also remarked that talent shortage was a common problem experienced by all industries, and this could be addressed by standardising processes and IT infrastructure.

The two-day conference revolved around the belief that the regional port industry’s widespread growth has come to an abrupt end as a result of economic stagnation which has made it difficult for operators to maintain high performance.

Regarding building high performance ports, competing in this highly dynamic environment calls for port operators to be more nimble in their operations. They must differentiate themselves in the eyes of customers by rapidly identifying and developing new services that set them apart from competitors. This is especially true in Asian countries such as China, India and ASEAN, including Vietnam.

In view of economic volatility, port operators were also encouraged to adopt flexible cost structures and use external partners to quickly build core competencies. They were also advised to standardise processes and IT infrastructure to build a good foundation for growth.

The conference participants agreed upon the fact that ASEAN consists of port operators at different stages of port lifecycles. Among them, the region’s leader, Singapore, is the most advanced; Malaysia and Indonesia are established; while Vietnam is an emerging port.

Singapore is expected to retain its lead and “exporting Singaporean expertise” will continue to benefit its overseas expansion plans. Vietnamese ports should be near manufacturing areas or import and export hubs, because this will allow operators to secure traffic from nearby factories, ensuring regular vessel visits and ongoing revenue.

The Vietnamese port industry is still facing many challenges that hinder its advancement, said Chu from Accenture. For example, traffic congestion is prevalent in ports located near big cities, and uneven distribution of the shipment loads is seen across ports in Vietnam.

He added that the Vietnamese port sector’s inefficiencies led to higher costs and lower productivity. In 2012, Vietnamese ports operated at just 20 to 30 per cent of their capacity. Meanwhile, a 40-foot container shipped from Hong Kong to Los Angeles is 28 per cent less expensive than the one shipped from Ho Chi Minh City.

Another problem faced by Vietnamese ports is poor cooperation. Chu said this could be improved by entering into partnerships and privatising port businesses especially with worldwide port operating groups for financial and operational support.

Moving forward, Accenture now intends to increase its presence in the local market, said Lee.