The

Development of Freight Forwarding andMultimodal Transport in Viet Nam

Introduction

Since the last meeting in 1996, The Vietnamese Government has focussed its attentionon development of transport infrastructure facilities and regional co-operation. Greatsuccesses have been achieved and initially have helped to accelerate a great deal the activitiesof

freight forwarding and multimodal transport in the country.

With a view to establishing a close link between,shippers and consignees, freightforwarders in Viet Nam have been playing an increasingly important and active role in theeconomic development of the country. The Vietnam Association of Freight Forwarders(VIFFAS), Vietnam Shipowners Association (VSA), Vietnam Seaport Association (VPA)have

actively operated and have become members of many international and ASEANassociations.

The activities uromotin!! Frei!!ht Forwardin!! and Multimodal Transport inYietnam 1995-1999

1.

With the financial support and assistance from ESCAP, a Seminar onfacilitation and uniform trade documents in comI:nercial sector, transport bank,customs office was held by VIFFAS.

Established

the national freight forwarding association (VIFFAS) and joinedFIAT A.

VIFF AS has also signed agreement with FIA:r A on the issue of FBL inViet Nam.

VIFF AS has actively participated in discussion for amendments of the VietnamMaritime Code to upgrade its provisions in line with international practice and

standards and also contributed its part as consultancy in drafting a Section v/ithdetailed provisions on freight forwarding in the Vietnam Commercial Code.

Together with other relevant bodies from other ASEAN members, VIFF AS hassigned the ASEAN Framework Agreement on Facilitation of Goods in Transitand adoption of the ASEAN Framework Agreement on Multimodal Transportbetween ASEAN member states.

(e)

(f) In conjunction with the ASEAN Secretariat with its financial support, aWorkshop on the Role of ASEAN Transport and Post Office in 21 st Centurywas held, among other important topics multimodal transport was focussed astop priority during this workshop.

185

Project ISO 9000.(g)

The Vietnamese Government is considering having State organizations comeunder the international quality control regulatory system called the ISO 9000.

The current list of about 60 companies having been certified ISO 9000 in thecountry and about another 250 local business could be granted ISO 9000 by theyear 2000.

Some Vietnamese freight forwarders were certified for ISO 9002 and haveactually carried out transit shipment of sawn woods from Laos PDR to a thirdcountry by multimodal transport contrncts.-

There are several ways to improve quality to meet international standards, butthe system was aimed at ensuring consistency in quality, from the first batch tolater, rather than setting an internationally judged standard quality level. Theidea is to get a company able to sustain the quality of its p!oduct, to a level ofpredictability that means overseas buyers can be sure of what they are buyingor getting from the services.

(h) There are a number of ICDs in Hanoi and Ho Chi Minh Cities have been putinto operation and being recognized as a good place of receipt or delivery.

VIFF AS has also cooperated with Bao Minh Insurers in Ho Chi Minh City inestablishing coverage of risks of the -freight forwarders.

(i)

Accession to international inven1ions

Viet Nam has been actively participating in drafting relevant ASEAN FrameworkAgreements relating to freight forwarding business and transportation. They are the ASEAN

Framework Agreement on Multimodal Transport being targeted to be concluded by the year2000, another noteworthy document ASEAN Framework Agreement on the Facilitation ofInter -State Transport is being scrutinized.

Viet. Nam has ratified the ASEAN Framework Agreement on the Facilitation of Goodsin Transit which was signed in December 6th 1998 in Hanoi during the 6th ASEAN summit.Viet Nam is also involved in drafting the 9th Implementing Protocols to this Agreement andtwo

of which, were concluded in September 15th 1999 during the 5th ASEAN TransportMinisters Meeting (A TM) in Hanoi.

In addition to the regional conventions; Viet N am also co-operates with the neighbouringstates to have some subregional arrangement facilitating cross-border movement of goods andpeople.

An Agreement between Lao PDR, Thailand and Viet Nam will be concluded inNovember this year in this regard for road transportation. Viet Nam took the initiative to co-operate with the Kingdom of Cambodia, Lao PDR, and Myanmar to form an subregional airtransport arrangement to step by step liberalize air services, among the four countries.

186

The Development of Freight Forwarding andMultimodal Transport in Viet N am

Introduction

Since the last meeting in 1996, The Vietnamese Government has focussed its attentionon development of transport infrastructure facilities and regional co-operation. Greatsuccesses have been achieved and initially have helped to accelerate a great deal the activitiesof

freight forwarding and multimodal transport in the country.

With a view to establishing a close link between s.hippers and consignees, freightforwarders in Viet Nam have been playing an increasingly important and active role in theeconomic development of the country. The Vietnam Association of Freig~t Forwarders(VIFFAS) , Vietnam Shipowners Association (VSA), Vietnam Seaport Association (VPA)have actively operated and have become members of many international and ASEANassociations.

1.

The activities l!romoting Freight Forwarding and Multimodal Transl!ort inVietnam 1995-1999

With the financial support and assistance from ESCAP, a Seminar onfacilitation and uniform trade documents in comm.ercial sector, transport bank,customs office was held by VIFFAS.

(a)

(b)

Established

the national freight forwarding association (VIFFAS) and joinedFIAT A.

(c) VIFF AS has also signed agreement with FIAT A on the issue of FBL inViet Nam.

(d) VIFF AS has actively participated in discussion for amendments of the VietnamMaritime Code to upgrade its provisions in line with international practice andstandards and also contributed its part as consultancy in drafting a Section v/ithdetailed

provisions on freight forwarding in the Vietnam Commercial Code.

Together with other relevant bodies from other ASEAN members, VIFF AS hassigned the ASEAN Framework Agreement on Facilitation of Goods in Transitand adoption of the ASEAN Framework Agreement on Multimodal Transportbetween ASEAN member states.

(e)

(f) In conjunction with the ASEAN Secretariat with its financial support, aWorkshop on the Role of ASEAN Transport and Post Office in 21 st Centurywas

held, among other important topics multimodal transport was focussed astop priority during this workshop.

185

Project ISO 9000.(g)

The

Vietnamese Government is considering having State organizations comeunder the international quality control regulatory system called the ISO 9000.

The

current list of about 60 companies having been certified ISO 9000 in thecountry and about another 250 local business could be granted ISO 9000 by theyear

2000.

Some Vietnamese freight forwarders were certified for ISO 9002 and haveactually carried out transit shipment of sawp woods from Laos PDR to a thirdcountry by multimodal transport contracts.

There are several ways to improve quality to meet international standards, butthe system was aimed at ensuring consistency in quality, from the first batch tolater, rather than setting an internationally judged standard quality level. Theidea is to get a company able to sustain the quality of its product, to a level o,fpredictability that means overseas buyers can be sure of what they are buyingor getting from the services.

(h)

There

are a number of ICDs in Hanoi and Ho Chi Minh Cities have been putinto operation and being recognized as a good place ot: receipt or delivery.

(i) VIFF AS has also cooperated with Bao Minh Insurers in Ho Chi Minh City inestablishing coverage of risks of the freight forwarders.

Accession to international inventions

Viet Nam has been actively participating in drafting relevant ASEAN FrameworkAgreements relating to freight forwarding business and transportation. They are the ASEANFramework Agreement on Multimodal Transport being targeted to be concluded by the year2000, another noteworthy document ASEAN Framework Agreement on the Facilitation ofInter -State Transport is being scrutinized.

Viet Nam has ratified the ASEAN Framework Agreement on the Facilitation of Goodsin Transit which was signed in December 6th 1998 in Hanoi during the 6th ASEAN summit.Viet Nam is also involved in drafting the 9th Implementing Protocols to this Agreement andtwo

of which, were concluded in September 15th 1999 during the 5th ASEAN TransportMinisters Meeting (A TM) in Hanoi.

In addition to the regional conventions; Viet Nam also co-operates with the neighbouringstates to have some subregional arrangement facilitating cross-border movement of goods andpeople.

An Agreement between Lao PDR, Thailand and Viet Nam will be concluded inNovember this year in this regard for road transportation. Viet Nam took the initiative to co-operate

with the Kingdom of Cambodia, Lao PDR, and Myanmar to form an subregional airtransport arrangement to step by step liberalize air services, among the four countries.

186

In short, by the above subregional arrangements freight forwarding services inparticular and cross border transport of goods and people in general have been greatly pickedup.

2.

Current status of frei!!ht forwardin!! and multimodal tranSDort in Viet Nam

In 1998, Viet Nam witnessed tremendous success in building transport infrastructure.An investment of VND 5,235 billion for capital construction projects exceeded the annualplan by 3.6 per cent. Most key infrastructure facilities were completed on schedule.

The aforesaid projects included adding asphalt surfaces Jo 1,265 km of roads andbuilding 120 bridges totalling 7.5 km in length in 1998 and in'1999 further upgrading of 1,650km of highway No lA, 18 and 10 as well as 2 bridges and Hai Van Pass Tunnel:

In the process of integration with the regional countries and the world the GreaterMekong Subregion, GMS, consists of five non-peninsular countries of which Viet Nam playsan important role as-the eastern gate to the countries of the GMS. This project was focussedat a recent International Conference in Tokyo as well as in the ASEAN 8th STOM/5th ATMMeetings in Hanoi 13-14 September 1999 as a major regional initiative to foster the regionalcooperation and actively support this priority project as a key strategic objective.

The East-West Corridor linking Viet Nam's sea ports to Laos PDR and the Northeast ofThailand will certainly playa vital role in the development of trade for OMS countries,

eventually Laos will become a "Land link" country to the OMS and Thailand intends to developits north eastern region as well as China will also drive the development of its adjacent provinces

Yuannan, Qinghai and Tibet etc... -

The GMS corridor will also be an advanced component for the future ASEANHighway Network.

(a)(b)

Volume

of cargo and routines (see Attachment I-G)Procedures on import and export and transit

': To promote import and export, the Government has recently improved a lot of theprocedures on import and particularly on export that facilitate the freight forwarding services.

Paperwork has been cut down and streamlined particularly by a recent decision taken by theVietnam Customs General Department provided for more simplification of customs clearancewhich greatly helped in facilitating the export and import businesses of the freight forwarders.In clearance services for in and out bound containers from ICD are also improved a great deal.As

a result b~densome formalities are considerably reduced which boost in turn export andimport remarkably at the end of the day.

Viet Nam and Lao PDR meet yearly to discuss and work out measures on improvingcross border movement of goods and people, particularly in transit. Therefore, rnultimodal

transport improves largely.

187

(c)

National

law and regulations on transportation of goods:

In order to create a legal framework for transport of goods and people not only in thecountry but also for international related services, the Government has tried to introduce morelaws and regulations to regulate the transport sector. Law on railway transport, law on inlandwaterway, transport and Code of road transport are being drafted. Hopefully, theselegislations would be presented to the National Assembly for its adoption by the year 2000.

Amendments to the Code of maritime transport has been drafted beside amendments tothe law on ' civil air transport were made in 1998. The Government has instructed the lineministries to review the relevant regulations on transport and freight forwarding services inartier to improve the legal framework for facilitating transport services and coping with theincreased transport cooperation with other countries. The Government is working on theestablishment of the National Transport Coordinating Committee to meet the requirements ofthe

ASEAN Framework Agreement on the facilitating of goods in transit.

3.

Difficulties encountered by the sectors

Numerous problems, being encountered in operation of the transport sector despitecountless moves and measures adopted by the government in cooperation with various

relevant ministries and transport operators themselves but inevitably hampered by:

Poor condition of transport infrastructures particularly preventing or obstructingmovements of goods and passengers.

Lack of laws and regulations as required in governing multimodal or in any other.transport sector.

Insurance

is another issue which so far is still lagging behind for instance ininternational transport T. T. Club coverage is still unavailable.

Lack of know-how or skills of handling in specific freight forwarding andtransport as well as in relevant international rules and regulations internationalpractices

etc. of the Vietnamese operators to meet with ever increasingdemands of markets.

Unavailability or absence of feed back on up to date technology infonnation oncurrent international conventions relating to freight forwarding and multimodaltransport etc.

4.

Solutions reguired to overcome the above mentioned nroblems

Firstly, the Government should invest more in developing transport infrastructure endformulate laws and regulations covering transport services.

Secondly, transport operators should actively cooperate with the Government todevelop infrastructure and relevant regulations.

188

Thirdly, assistance from international organizations such as ESCAP to helpVietnamese operators and agencies in improving or formulating regulations and professional

skills in this regard, such as organization of workshops or seminars are needed to bringupdated information and skills as well as experiences for the Vietnamese operators and otherconcerned

bodies.

Fourthly, a need in exchange of information and sharing of experience on freightforwarding and multimodal transport services is urgent. Regional cooperation must beenhanced.

Maritime Transp:ort Status

Despite the prolonged regional financial crisis and the national economic slump in 1995,Viet Nam has made remarkable progress in shipping cargo and building major communicationinfrastructure

across the nation.

According to the Ministry of Communication and Transport, the transport sector hadmoved over 117 million tonnes of cargo in 1998, an increase of 6 million tonnes over 1997.

The year 1998 also witnessed a high growth in marine transport. A volume of 56million tonnes were shipped via ports, up by 17.4 per cent over 1997.

The National Merchant Fleet

Over the last three years the national merchant fleet has added 20 containers and drycargo vessels of aggregate tonnage of 27,000 dwt and further additional 56,400 dwt in oiltankers which increased its national fleet remarkably to more than 1 million tonnage with theaim for a larger share of the local freight market. Presently, Viet ~am has a fleet of 587 shipsincludes 3 crude oil tankers of 100,000 dwt and over 40 others of over 10,000 dwt and theremainder are small coastal vessels varying from 200 dwt to 5,000 dwt. In particular,the Vietnam National Shipping Lines (Vinalines), the flag leader in maritime industryencompassed 24 companies among them 6 shipping entities who owned and operated 70 seagoing ships with an aggregate tonnage of 640,000 dwt:

As a matter of fact, its market share has gradually sustained a growth from 10 per centlast year to 15 per cent and over in 1998, This success has been attributed to intensive effortsin extending and upgrading the fleet of coastal ships, bulk carriers, container ships and oiltankers.

In the first 6 months of 1999 the Vinalines fleet has succeeded in moving 55 per centof the 1999 target, an increase of 21 per cent compared with the same period of 1998, ofwhich overseas freight movement reached 56 per cent of the target, an increase of 26 per centduring the same period, domestic shipment recorded 52 per cent of the annual target with amodest increase of 4 per cent in the first half of the year. Container transport reached 56 percent of its target, a 23 per cent increase compared with the same period of the last year.

189

For further enhancing its competitive capacity, Vinalines, by its companies, willpurchase 2 oil tankers of 30,000 dwt and 5,000 dwt and 2 dry cargo single decker by the

second half of 1999 to expand its fleet number despite the present economic slump in theregIon.

The maritime transport market in Viet Nam has great potential that attracted more than30 foreign shipping companies operating in Viet Nam, 17 of them are container feederservices having ships calling weekly or biweekly at the Vietnamese ports.

Number of current existing Cargo ships

500-

1 1000-

999 1999

2000-4999

DWT Per cent

Ocean goingvessels

State

9 1.1 8

1.61521

27 107 676,320 58.9

Joint venture

4

7 5 18 255,021 22.2

Sub total 9

9

11 20 22

22

32 125 931,341

Coastal vessel

Local

governments 16

12712

33 14

3

205

146,76112.8

Cooperative 18 19 4,400 0.4

Private

7

8520

14

2

128

65,351

5.7

Sub total 24

230

32

47163352

216,512

Grand total 33

24167

36 25

41

32 477

1,147,853

100

Expansion rate of the merchant fleet in the last 3 years

1996 1997 1998Sectors

Number I DWT Number DWT Nwnber DWT

Ocean going ships 6 69,007

11

110,643 4

67,799

State companies

8

98,945 4 67,799

3

11,698Joint venture

Coastal vessels 13 4,185 15

8,321

3 1,455

Local governments

3

600 4

2,463

2 979

2 400

1

200

Cooperative83,18510Private5,658

476

190

Merchantfleet expansionprojectionjrom 1999 to 2010

Type of Vessels Number Size of Vessels TEU

Remarks

11,20021,600

For serving to China-Japan-South Korea & IndiaContainer vessels

14-18

800-1,200 TEUs

65,000

DWT

From 2001 to 2005 servingexport oil.Refinery No.1 from 2006to 2010 purchase 3 vesselsof 90,000 DWT

Crude oil tankers

5

Oil products tankers

60,000-80,000

DWT

With the aim to increasemarket share from thepresent 14°!0-to 40 per centin 2010

Aimed at larger marketshare to over 20 per centin 2010

Bulk Carriers 10-14

24,000-35,000

DWT

Sea 12°rts in Viet Nam

In 1998 cargo throughput at Vietnamese sea ports reached 56 milli9n tonnes, 17 percent increase over that of 1997. Of this volume, export was 23 million tonnes, import at 21million tonnes, 9 per cent increase respectively and domestic cargoes at 11 million tonnes.Saigon Port topped the list by 7.4 million tonnes throughput, second was Haiphong Port at 5.3million for the first time, next was Da Nang and Quy Nhon Ports, with less than one milliontonnes each, which take up third and fourth spots respectively.

In the first six months of 1999 Saigon Port has discharged 5.6 million tonnes from 1,228ships callings, achieved 72 per cent of its target increased 140,000 tonnes than at the same periodlast year. Haiphong Port: the biggest sea port in northern Viet Nam handled more than 4.8million tonnes of cargo by mid-September. It is striving to fulfil its yearly plan of six milliontonnes of cargo in 1999. Since early this year, the port has invested VND 20 billion (US$ 1.42million) in upgrading infrastructure facilities thus raising its capacity to about a half-milliontonnes per month.

Cargo throughput in the 85 plus sea and river ports rose from 16.5 million tonnes in1990 to 35 million tonnes in 1995. This was attributed to the Vietnamese's Renovation policyin more than 10 years ago in spite of the current economic downturn in the regional countries.The current plan envisages that the number of seaports will grow to 114 over the coming years.to cope with the economic development of the country as a whole. Based on current forecasts,although being impacted by the regional economic downturn with an assumed economicgrowth rate of 6 per cent in 1998, the cargo throughput at the ports is projected to increase to106 million tonnes by 2000 and 268 million tonnes by 2010.

The above sea ports are divide~ into 8 groups according to their geographic locationsfrom the northern most province Quang Ninh close to China to the southern most province ofKien Giang. In conjunction with this plan three economic triangles were mapped out in the

191

three parts of the country with their sea ports as their transport hubs and the gatewaysrespectively to boast their domestic and international trade. Each group of sea ports consistsof several closely linked network of sea ports to serve their adjacent hinterland.

Haiphong Port in the North has been renovated by implementing the PortRehabilitation Project to raise its cargo throughput capacity to 6.2 million tonnes by 2000including containerized cargoes of up to 250,000 TEUs. This Project is financed by ODA andOECF from Japan.

Among the 20 ports in Ho Chi Minh City, the Vietnam International ContainerTerminal (VICT) a joint venture worth ofUS$ 54 million bas recently begun its operation in 2berths of 305 length and 2 gantry cranes to accommodate simultaneously 2 container vesselsof 20,000 dwt, in 1999 scheduled to handle 170,000 TEUs and expected to raise its annualcapacity to 600,000 TEUs when the three stages are completed.

In addition with IAPH and AP A membership, the Vietnam Port Association (VP A) hasintensified its international cooperation on bilateral or multilateral bases such as Saigon Portwith Port of Zhanjiang (P .R.C.), Port & Harbour Bureau in Osaka (Japan) and the Port of LosAngeles (USA) for further integration with the region and the world.

192

VOLUME OF MAIN EXPORT AND IMPORT CARGOES THROUGH SEA PORTSMANAGED BY THE CENTRAL GOVERNMENT

By commodities 1995 1996 1997

14,478.9

15,435.8

15,032.4

'rotal

(in thousand tonnes)

Exports:

of which

3,737.1

4,379.0 4,647.6

477.0Coal 488.2 316.0

Rice 1,564.5 ",249.0 2,490.5

lmports:

of which 7,903.2 7,531.9 6,678.3

l""ertilizers1,350.1

1,554.5 1,450.0

1,297.1

1,499.6 1,158.8Machinery equipment

Domestic

goods 2,823.2 3,254.9 3,706.5

By sea ports: (in thousand tonnes)

4,515.0493.0

4,809.0665.0

4,588.0803.0

Haiphong Portof which Export

2.

Saigon Portof which Export

7,212.02,308.0

1,340.02,692.0

6,820.02,764.0

3.

704.0477.0

813.0491.0

798.0322.0

Quang Ninh Portof which Export

Nghe an Portof which Export

--

310.056.0

462.034.3

4.

480.052.6

5.

530.2149.4

~47.9198.2

822.2279.7

Oa

Dang Portof which Export

.

447.0171.0

554.7188.2

838.1276.1

6.

Quy Nhon Portof which Export

7.

343.4171.0

426.0188.2

424.0276.1

Nha Trang Portof which Export

125.966.1

183.273.3

8. 202.1113.2

Can Tho Portof which Export

193

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