Friday, March 30, 2012

Rail Freight Plans Germinate to Improve Container Haulage

Another East Asian Country in Need of Investment
Shipping News Feature

VIETNAM – Geography dictates that the bulk of any rail freight passing through or around the country will always be on the main line running North – South between Ho Chi Minh City and Hanoi with 60% of the nation’s rail cargo travelling the route. Despite setbacks, in 2010 the plan to upgrade the tracks with a high speed link by 2013 was rejected by the Government, there is in place a two stage program to transform container haulage in the next three years.

The intent is to reduce the amount of trucks travelling the highways to and from the port of Hai Phong by increasing the volume of 40 foot containers carried on rail wagons with immediate effect and the authorities have announced that the intent is to move 230+ TEU’s per day by this method before the end of the year and to extend the scheme to other routes thereafter.

The key to success will be attracting enough foreign investment to make the plans become a reality; the country is still cursed with the eccentric mix of gauges which always prove difficult in these scenarios but it seems that Chinese and other national interests may have at last realised the value of a twin track standard gauge system to not only link the coast with the capital but join Cambodia and Thailand and thus Singapore and even possibly Laos ensuring a practical route for freight in a country which still struggles with its own history.

A recent Asian Development Bank (ADB) report noted the potential for a rapid increase in freight cargo carriage by rail and since 1993 Vietnam has been one of the greatest beneficiaries of ADB finance, particularly in an effort to increase road infrastructure with rail coming a very distant second in terms of priority. As the country gradually has become more affluent so the requirement to evolve a better transport system to power the economy becomes more urgent and the efficiency of rail freight is now paramount.

Currently less than 10% of freight traffic utilises the ageing rail system but, with a highway system constantly under threat from seasonal floods and a lack of infrastructure expenditure on highways despite the efforts of the ADB, a concerted effort to upgrade rail travel in the region not only looks a sensible investment but one which is long overdue.

Meanwhile shippers in the country continue to rage at the increases in container costs which the ocean freight carriers have imposed in the past few weeks. Local trade publications are full of letters from local companies criticising the box lines for the swingeing rate increases, up to $1000 per container, which they have been forced to pay after quoting on regular C&F export business using what were existing rates.

Better news is the report that the $52 million construction of the Sai Gon 2 bridge, a 900 metre long, four lane link paralleling the existing bridge is due to start in April to be completed within two years.

Photo: A typical Hanoi section of track.