Boston, MA -- (ReleaseWire) -- 12/31/2012 -- We do not envisage a strong pickup in Vietnamese exports due to growing evidence of a lacklustre recovery in global demand in 2013, which will have a knock-on effect on the country's freight industry. Additionally, Vietnam's main export partners, the US, China and Japan, are all finding it hard to shake off the economic hangover of 2012. That said, Vietnam's economy remains on track for a robust recovery in 2013, and we view consensus estimates on growth as being overly pessimistic. Also, looking at the breakdown of exports, we are seeing encouraging evidence that Vietnam is becoming less reliant on refined crude imports (dominantly petroleum imports) and could soon become a net exporter of crude oil over the coming years.
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By mode, the largest growth is set to occur in the maritime sector, with the country's biggest port, Ho Chi Minh City, set to enjoy year-on-year (y-o-y) growth of more than 7.50% in 2013. Air and road freight sectors will both see annual growth of more than 6% this year, while propping up the freight mix will be rail.
There are encouraging signs that China is seeking to strengthen ties with its Asian neighbours, providing a boost to infrastructure. The Yuxi-Mengzi railway line, which will start operating in Q412 and was funded by Chinese investment, will eventually run between the Yunnan province in China and Laos, Singapore, Thailand and Vietnam. Vietnam still suffers from a significant deficit in transportation infrastructure, and we believe the Vietnamese government will continue to develop this sector over the medium term.
Headline Industry Data
- 2013 rail freight tonnage is set to increase by 3.12% to 8.71mn tonnes.
- 2013 air freight tonnage is forecast to rise by 6.06% to 220,620 tonnes.
- Tonnage handled at the Port of Ho Chi Minh City in 2012 is forecast to grow 7.56% in 2013, whereas tonnage handled at the Port of Da Nang is forecast to increase 4.33%.
- 2013 road freight tonnage is forecast to grow by 6.85% to 713.01mn tonnes.
- 2013 total trade is forecast to rise by 5.70%.
Key Industry Trends
Vinalines' Woes Continue
We believe that Vietnam National Shipping Lines' (Vinalines) losses sustained in the first half of 2012 are largely due to the twin factors of corruption and financial mismanagement. Although the shipping sector has been hard hit by global economic headwinds in recent times, Vinalines' heavy exposure to Vietnam's domestic transport sector, which has been performing well recently, indicates that the company's struggles go beyond the troubles facing the global industry.
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