Dearth of cargo sees port investors coming up short

Southern Cai Mep-Thi Vai port complex investors are all at sea as they struggle to attract cargo.

Five terminals have been developed in Ba Ria-Vung Tau province’s Cai Mep-Thi Vai area including Cai Mep International Terminal, SP-PSA International Port and SP-SSA International Container Terminal, which are jointly invested by state-run Vinalines and Denmark’s APM Terminals BV, Singapore’s PSA International and US’ SSA Marines, respectively. The other terminals are Saigon New Port’s Tan Cang-Cai Mep Container Terminal and Hutchison Port Holdings’ Saigon International Terminals.

 Ngo Minh Tuan, deputy director of Saigon New Port, said all terminals in Cai Mep-Thi Vai area were in a perilous state and suffering losses, some up to $30 million per year.

 The port complex was touted as becoming an international transshipment port in the southern region to replace Ho Chi Minh City’s ports. However, despite the five terminals opening in  2009,  cargo is still mostly handled by the second city’s ports.

The hunger for cargo has resulted in fierce competition between port operators at Cai Mep-Thi Vai, forcing them to reduce uploading and loading rates to attract vessels.

 Nguyen Xuan Ky, deputy director of Cai Mep International Port,  said  investors jumped into the project on the assumption on loading rates at $55-$60  per 20-foot equivalent units (TEU). However, this had plummeted to below $40 per TEU, he said.

“With this price [below $40], most ports are suffering losses,” he added.

The Ministry of Finance late last month stepped in to propose the Vietnamese government set a minimum rate for loading and uploading services in ports. This proposal followed a petition by the Ministry of Transport, Vietnam Port Association and port operators at Cai Mep-Thi Vai.

Nguyen Thu Trang, director of Baria Serece Phu My Port, said a minimum rate would safeguard investors, but was just a short-term measure to address the current dire situation.

“There are many reasons for shippers to keep on handling cargo in Ho Chi Minh City’s ports. They have a habit of resolving custom procedures in inland clearance depots in southern Binh Duong and Dong Nai  provinces and the construction of inland infrastructure linking terminals is at a very slow pace,” Ky said.

The expansion of the National Road 51 connecting Cai Mep-Thi Vai with other provinces like Dong Nai and Binh Duong, home to thousands of foreign-invested companies, remains under construction even though this project started in 2009. Meanwhile, the construction of internal roads in Cai Mep-Thi Vai port complex is also at very slow pace as the local authorities failed to arrange funds for this project.

Because of the losses at Cai Mep-Thi Vai’s terminals, in June the Vietnamese government instructed state-owned Vinalines to review and restructure its capital contributed to joint ventures with foreign partners at this complex, including Cai Mep International Terminal, SP-PSA International Port and SP-SSA International Container Terminal. Vinalines holds a 51 per cent stake in each port.