SSA Marine’s investment in Vietnam’s fledgling port system looks to pay future dividends with the Southeast Asian nation’s growing trade.
Cargo owners and the container-shipping alliances are benefiting from the foresight of SSA Marine’s two ventures in port facilities in Vietnam. Although bulk cargo is still dominant, SSA Marine Vietnam terminal operations are capable to handle the growing container shipments. Trade agreements, larger vessels and new transshipment rules will further boost Vietnam’s needs for seaport improvements.
Seattle, Washington based SSA Marine began in 1949 as a cargo handling operation by Fred R. Smith under the name Bellingham Stevedoring Company. Carrix, Inc. is now the parent company and privately-held with terminal operations in ten countries for stevedoring, marine terminals and rail yards. CICT (Cai Lan International Container Terminal) is located near Ha Long Bay/Cai Lan, Quang Ninh province in the North of the country close to Vietnam’s borders with China. The second terminal is SSIT (Saigon Port-SSA International Terminal) located in the South on the Thi Vai River Ba Ria Vung Tau province. “SSA Marine is a shareholder at two port facilities in Vietnam. We are locally partnering with companies controlled by the Vietnamese Ministry of Transport,” said Bob Watters, senior vice president, SSA Marine in an interview with AJOT.
SSA’s Vietnam Terminals
CICT opened in August 2012 in Cai Lan Port on 45 acres and costing $155.3 million and became Customs-Trade Partnership Against Terrorism (C-TPAT) certified in 2013. On May 31, 2017, HS Baffin called, a 5,000 TEU vessel, of Hyundai Merchant Marine and ZIM on the ACS route: India-Malaysia-Singapore-Cai Lan-Korea-China. CICT’s location is optimal for access and equipment to handle barge shipments to the hinterlands, the national railway network and 4 in/4 out truck lanes as well as 75 miles from the new Noi Bai International Airport. These transport modes near CICT’s three berths at the Port’s 33 to 43 feet draft provide shippers a gateway to southwest China markets of 400 million people via border trade to Lai Cai-Hekou, People’s Republic of China (PRC), Lang Son-Pingxiang, PRC and Mong Cai-Dongxing, PRC.
The Cai Lan terminal uses four STS Post-Panamax cranes to seventeen container rows and three mobile scale cranes for cargo discharged directly from vessel to barge alongside for agriculture bulk trades on the 1,949 feet total berth length. CICT has a 520,000 TEU capacity as well as twelve e-RTGs, twenty-eight tractors and 448 reefer plugs for the growing cross-border, regional and international agriculture and aquaculture trades and is situated near a logistics area and Customs office. The terminal measures productivity of 40-45 moves per hour for containers, break bulk and project cargoes, according to the website of CICT.
SSIT is located in the Cai Mep-Thi Vai port area 52 miles southeast of Ho Chi Min City (HCMC) as a gateway port for the southern economic hub where many multinational corporations are producing as are the seafood trades. In the area, there are seven ports of which two are foreign joint ventures, SSIT and Cai Mep International Terminal (CMIT) and three domestic ports. This deep-water (54 feet) port cluster is benefiting from a shift from the “draft restricted container terminals further upriver in the HCMC area,” said Soren S. Pedersen, general director, SSIT to the AJOT.
In fact, SSIT data shows a steady increase of South Vietnam container growth from HCMC to Cai Mep from 2013 to 2016. In 2013, 10% of container shipping was for HCMC to 3% for Cai Mep and in 2016 was 3% to 35%, respectively, according to Pedersen. The three major shipping alliances of 2M, Ocean Alliance and THE Alliance dominate the Asia-Europe and Asia-North America routes and took notice of SSIT and Cai Mep. Pedersen explained, “Starting in April, the three large global alliances will offer up to twelve weekly east/west calls at Cai Mep. The growing presence of mega container vessels capable of carrying up to 14,000 TEUs which SSIT and other terminals were purpose built for, bodes well for the area’s future.” SSIT is undergoing an upgrading process which will see the facility transition to container handling during the second half of this year.
SSIT is built on 123.6 acres with three berths and began operation in August 2014. This is a joint venture between Saigon Port with 39%, Vinalines with 11% and SSA Marine with 50%. They have the largest STS gantry cranes in Vietnam for commodities ranging from steel to fertilizer and agriculture products. The 1,969 feet vessel berth length also has a 1,969 feet barge berth with four super Post-Panamax STS gantry cranes alongside with “back-reach to handle barges.” Cai Mep is 558 miles from Laem Chabang, Thailand’s main port. This will serve as a regional transshipment located on the main East-West shipping artery between Singapore and Hong Kong.
Recently, the Vietnamese government loosened rules over the transshipment of goods through Cai-Mep-Thi Vai port area. The revision is on Article 44 of Decree No.8/2015 that authorize transshipment of goods for export in Cai Mep. The Ministry of Finance also issued guidelines for Customs procedures for cargo transshipments. In effect after an initial trial period, this revision will allow shipping firms to shift goods to the Cai Mep area and benefit port operators such as SSIT. “Under Article 44, transshipment cargo is moved from an overseas country to a local destination, then immediately shipped to another overseas location. The rule did not permit goods to be transshipped domestically for the purpose of export via a different border gate, unless permitted by international agreements,” according to an article in Vietnam Investment Review.
This rule change will affect an already growing container throughput. Since 2014, Vietnam’s “container volumes, across the country, have historically been growing at approximately double the gross domestic product (GDP) rate,” said Pedersen. In 2016, container throughput grew by about 10% for a total of about 12.7 million TEUs. In 2014, it was 6% GDP and peaked at 16.6% container rate. “Both our terminals are today primarily handling bulk cargo and operating at close to full capacity,” Pedersen added.
Vietnam’s port capacity handle a large portion of bulk cargoes. For example, steel imports to Vietnam grew nationally by 33% in 2016 to 15.7 million tons and animal feed imports grew by 23.8% in 2016 climbing to about 17 million tons country-wide, according to SSA Marine.
The United States figures into the Vietnam trade, significantly. U.S. exports to Vietnam were $10.3 billion ($2.7 billion agriculture) up 43% in 2016 over 2015 and up 823% in ten years. However, there is a persistent trade deficit from $1.8 billion in 2002 to $31.99 billion in 2016 and already in 2017 a deficit of $14.9 billion ($18.4 billion imports-$3.5 billion exports). The Trump Administration is addressing this and in May the two trading partners met under their Trade and Investment Framework Agreement (TIFA) in Hanoi and was the first meeting since 2011. In addition, the Vietnamese Prime Minister Nguyen Xuan Phuc visited the U.S. in May to sign $17 billion in deals for U.S. goods and services. “While the Trans-Pacific Partnership (TPP) has taken a back seat with the Trump Administration’s withdrawal from the pact, Vietnam has recently concluded free trade agreements with the EU and several Asian countries. We expect that Vietnam’s strong box growth will continue in the years ahead,” concluded Pedersen and Watters.