News #62 - The state of Vietnam logistics infrastructure connectivity

Road System

According to the Vietnam Logistics Report 2022 by the Ministry of Industry and Trade, the total length of the national road system is currently 595 201 km, of which national roads (including highways and expressways) account for 25 560 km.

Overall, the coverage of the national highway network is good. However, due to the terrain conditions, 39% of the national highway network is located in mountainous areas, and many routes planned as national highways have not been upgraded and do not meet the required design standards.

The national highway system is about 64.76% paved with asphalt, while the remainder consists of cement concrete, chip seal, and graded surfaces. Roads with one lane account for 11.04%, two lanes for approximately 74.53%, four lanes for 13.93%, and six to ten lanes for 0.5%, with the rest varying in width.

According to the Vietnam Logistics Report 2022 by the Ministry of Industry and Trade, in 2023, many sections of the North-South Expressway were put into operation, such as Mai Son-National Highway 45, Nha Trang-Cam Lam, Vinh Hao-Phan Thiet, and Phan Thiet-Dau Giay. These projects are part of the Eastern North-South Expressway phase 2017-2020, with a total length of 312 km. By the end of 2023, the entire country had 1,822 km of expressways, with about 1,071 km under construction. Efforts are being made to complete procedures for key national projects: Hanoi Ring Road 4, Ho Chi Minh City Ring Road 3, Khánh Hòa - Buôn Ma Thuột Expressway, Biên Hòa - Vũng Tàu Expressway, and Châu Đốc - Cần Thơ - Sóc Trăng Expressway.

Railway System

According to the Vietnam Logistics Report 2023 by the Ministry of Industry and Trade, the national railway network has a total length of 3,143 km and includes 227 stations, with 2,703 km of mainline tracks, 612 km of station and branch tracks, comprising seven main routes. The railway network connects at the Hanoi hub and currently passes through 34 provinces and cities, covering 4 out of 6 economic regions of the country. 

The railway density is about 9.5 km per 1,000 km² (average for ASEAN and the world). There are two routes connecting with China at Đồng Đăng (Hanoi-Dong Dang route) and at Lao Cai (Hanoi-Lao Cai route). The operational capacity on most main railway lines is only about 17-25 pairs of trains per day, with average speeds of 50-70 km/h for passenger and freight trains (maximum 100 km/h for passenger trains, 60 km/h for freight trains). Most railway lines were built long ago, so they have low technical standards, limited loading capacity, and speed, reducing competitiveness compared to other transport modes.

Maritime System

Vietnam has a vast maritime area, with a total area of over 1 million km², a coastline of 3,260 km, and over 3,000 islands spread along the country (Lan Anh, 2022). With its location close to international maritime routes and high density of sea traffic, Vietnam has favorable conditions for developing a seaport system to boost economic growth and ensure national security.

According to the Vietnam Logistics Report 2023, Vietnam has 34 seaports with over 100 km of wharves, with the seaport system being developed along the North-South corridor. The maritime fleet consists of 1,015 ships with a total tonnage of 10.7 million tons (ranked third in ASEAN and 27th globally); 839 coastal transport vessels (VR-SB) handle 100% of domestic sea freight and continue to develop, taking on cargo to relieve road traffic and replace other transport modes, especially along the North-South corridor.

The 2023 Vietnam Logistics Report indicates that investment in the maritime system during 2011-2020 reached about 7,9 billion USD, accounting for approximately 20.6% of total investment in national transportation infrastructure. Non-budget capital mobilized for maritime investments accounted for a large proportion (about 6,79 billion USD, nearly 86% of total maritime investment). Despite the global impact of the Covid-19 pandemic in 2020, the maritime sector still saw an increase in freight volume, reaching 692.2 million tons, exceeding the target for the 2020 planning period (about 8.4 times higher than in 2000).

Vietnam's seaports are spread along the country, from North to South, and the capacity of some ports is relatively high, capable of receiving large ships up to 65,000 DWT (Cam Pha port), 60,000 DWT (Saigon port, Phu My port), and 50,000 DWT (Quang Ninh port). Other ports such as Hai Phong, Dinh Vu, Vung Ang, Da Nang, etc., can handle ships with a capacity of 40,000 - 45,000 DWT (VLA, 2019).

Inland Waterway System

The total length of the national inland waterway system is 17,026 km, with 7,180 km managed by the Inland Waterways Department (Northern region: 3,044.4 km, Southern region: 2,968.9 km, Central region: 1,167.5 km). The network includes 45 main inland waterway routes: 17 in the North, 10 in the Central region, and 18 in the South. Additionally, 21 river-sea transport routes are planned, with 6 in the North, 4 in the Central region, 11 in the South, and some shared with maritime lanes. The country has 292 inland waterway ports: 217 cargo ports, 12 passenger ports, 2 general ports, and 63 specialized ports. There are also about 8,200 inland waterway wharves and over 2,500 cross-river passenger wharves.

In terms of quality and scale: The inland waterway port system mainly serves bulk and specialized cargo handling with outdated loading chains and low productivity. Meanwhile, newly invested modern inland waterway container ports are not yet efficiently utilized (cargo volume through ports is lower than design capacity). The current limitation of the inland waterway port system is that connecting roads have low load capacities, making it inconvenient to transfer goods by trucks. There is a need for preferential policies to invest in inland waterway ports connected with ICD dry ports and prioritize specific investment forms to create convenient connections between ports and roads.

According to the Vietnam Seaport Plan, connecting inland waterways with the seaport system is highly prioritized. This includes promoting the planning of container transport routes and ports connecting Quang Ninh and Hai Phong seaports along the coast to inland waterway ports in Nam Dinh and Ninh Binh; connecting container waterway ports along Transport Corridor No. 1 in areas like Bac Ninh, Hanoi, Vinh Phuc, and Hung Yen. Additionally, container transport routes connecting Cai Mep-Thi Vai seaport along the coast to inland waterway ports in Ca Mau and Kien Giang; from Cai Mep-Thi Vai-Ho Chi Minh City to Cambodia via the Tien River axis, connecting the Hau River axis to Can Tho, extending to An Giang; from Cai Mep-Thi Vai to Dong Nai, Binh Duong, and Tay Ninh.

The Vietnam Logistics Report 2023 highlights the completion and operation of the canal connecting Day River to Ninh Co River under the Northern Delta Transport Development Project in Nghia Hung district, Nam Dinh province, which contributes to reducing transport and logistics costs along Transport Corridor No. 2; developing green logistics transport routes along major inland waterways in the Red River Delta, Southeastern region, and Mekong Delta.

Airway System

According to the Vietnam Logistics Reports 2022 and 2023, the country has 22 operational airports with a total area of approximately 11,859 hectares, including 9 international airports and 13 domestic airports distributed across three regions: Northern region (7 airports: Noi Bai, Van Don, Cat Bi, Tho Xuan, Vinh, Dien Bien, and Dong Hoi), Central region (7 airports: Da Nang, Cam Ranh, Phu Bai, Phu Cat, Tuy Hoa, Pleiku, Chu Lai), and Southern region (8 airports: Tan Son Nhat, Can Tho, Phu Quoc, Buon Ma Thuot, Lien Khuong, Rach Gia, Con Dao, Ca Mau).

The notable highlight of the aviation sector in 2023 is the strong recovery of passenger traffic after two years of impact from the Covid-19 pandemic and the commencement of investment in Long Thanh International Airport.

Additionally, in 2023, the Prime Minister approved Decision No. 648/QD-TTg on June 7, 2023, for the Master Plan for the development of the national airport and airfield system for the period 2021-2030, with a vision to 2050. According to the plan, by 2030, there will be 28 airports, including 14 international and

14 domestic airports. By 2050, the plan envisions 29 airports, including 14 international and 15 domestic airports. The plan prioritizes the establishment of logistics centers as cargo hubs at airports with a transport demand of over 250,000 tons/year. Logistics centers ensure warehousing conditions and connect suitable transport modes for cargo transport. The planned logistics centers at airports include Noi Bai, Tan Son Nhat, Long Thanh, Chu Lai, Van Don, Can Tho, and other airports with cargo transport needs meeting the specified criteria. The plan includes the development of large logistics hubs and international transshipment centers at Chu Lai International Airport.

Challenges and Difficulties

- Roads: The highway network is generally lacking, especially on high-traffic routes like the North-South axis and ring roads in Hanoi and Ho Chi Minh City. According to the Report on the Implementation of Decision No. 200/QD-TTg dated February 14, 2017, by the Prime Minister approving the Action Plan to improve the competitiveness and development of Vietnam's logistics services to 2025 by the Ministry of Industry and Trade (2022), 39% of the national highway network is in mountainous areas, and many routes planned as national highways have not been upgraded and do not meet planning requirements.

- Railways: Most railway lines were built long ago and have low technical standards with many limitations in loading capacity, resulting in low train speeds and reduced competitiveness compared to other transport modes. Investment in railway infrastructure remains limited.

- Inland Waterways: The inland waterway port system mainly serves bulk and specialized cargo handling with outdated and low-productivity loading chains. Newly invested modern inland waterway container ports have not yet achieved high efficiency (cargo volume through ports is lower than design capacity). The limitation of the current inland waterway port system is that connecting roads have low load capacities, making it inconvenient to transfer goods by trucks.

- Maritime: Although there have been significant advances in both institutions and infrastructure in recent years, the continuously increasing scale of import-export goods, mostly by sea, faces limitations in maritime transport capacity.

- Airways: Investment in completing and developing specialized air logistics centers at airports remains limited. Current cargo handling infrastructure is only specialized at Noi Bai International Airport and Tan Son Nhat International Airport. There is currently no airline in Vietnam specializing in transporting goods with dedicated aircraft.

- Logistics Centers: Although provinces have developed plans and started building integrated logistics centers within provincial planning, the implementation is still slow. The operational capacity of logistics centers has not met expectations due to scale and market impacts.

Some Solutions

To develop Vietnam's logistics transport infrastructure system in the coming time, the author proposes the following policy solutions:

On Developing Transport Infrastructure

By 2030, focus on investing in transport infrastructure to enhance regional connectivity, intermodal transport connections, and address traffic congestion. Maximize all resources, emphasizing internal resources, to attract investment from domestic and foreign sources, from various economic sectors, and in various forms to invest in developing transport infrastructure. Apply new technologies and materials in transport infrastructure construction. Strengthen the management and maintenance of transport infrastructure systems, allocating appropriate funds for maintenance. Establish a road maintenance fund soon.

On Ensuring Traffic Safety

Enhance the propaganda, dissemination, and education combined with increased enforcement of traffic order and safety laws. Conduct safety audits for all upgraded and newly constructed projects, and strengthen the application of intelligent traffic technologies to support and control traffic. Improve the quality of training, examination, and management of vehicle operators, and the quality of vehicle inspection.

On Environmental Protection

Strictly manage the implementation of environmental impact assessments for transport development projects, especially for highways and seaports passing through conservation areas; ensure good environmental monitoring and management, and regularly inspect environmental protection for construction, production, and transport business units. Control vehicle and fuel quality to minimize environmental pollution; encourage the use of clean vehicles and fuels.

On Connectivity and Development Cooperation

From 2021-2030, transport infrastructure development will continue to be a strategic priority for investment, advancing ahead with rapid and sustainable development. Given resource constraints, select a few key breakthrough projects for investment to create national development momentum. Increase investment in transport infrastructure from the state budget; maximize all resources and attract investment from all economic sectors; effectively exploit public assets and land resources to create capital for transport infrastructure development. 

Furthermore, research and improve tax, fee, and financial support policies to facilitate the development of public transport and multimodal transport. Prioritize investment in the North-South expressway from Lang Son to Ca Mau, major transport corridors, gateway expressways connecting Hanoi, Ho Chi Minh City, and major urban centers, urban ring roads; ensure the technical standards of Vietnam's road system are uniform and connect seamlessly with the ASEAN road system, Greater Mekong Subregion, and trans-Asia.

Additionally, focus on developing urban transport towards civilization and modernity. Gradually build mass transit routes in first-class urban areas. Continue investing in urban railway networks in Hanoi and Ho Chi Minh City to ensure public transport accounts for 40%-45% of passenger transport. Implement some sections of the North-South high-speed railway, prioritizing the Hanoi-Vinh section; rapidly develop urban railway networks as the core of public transport in major urban areas: Hanoi, Ho Chi Minh City; develop transport infrastructure in sync with modern transport means, management, and operation equipment, connected with major distribution centers, seaports, and ICD dry ports.

Complete the national airport network with modern scale; expand Noi Bai and Tan Son Nhat International Airports as planned; invest in Long Thanh International Airport (phase 1) with a role and scale comparable to major international airports in the region. Invest in a modern air traffic management system, ensuring the coverage of communication, navigation, and surveillance equipment as required within the entire FIR of Vietnam.

Invest in the remaining berths of Lach Huyen International Gateway Port, mobilize investment for Van Phong International Port, continue enhancing the efficiency of the Cai Mep - Thi Vai international port complex; continue investing in the Thi Vai channel to ensure 200,000-ton ships can navigate 24/24 hours; allocate appropriate land behind the port to build distribution centers, cargo handling, and logistics services connected conveniently with the national transport network, gradually creating a modern and efficient logistics infrastructure network comparable to regional countries. Continue upgrading the technical level and ensuring 24/24-hour navigation on major inland waterway routes. Mobilize investment for high-demand inland waterway routes; develop southern inland waterway and logistics corridors; mechanize handling at modern, efficient inland waterway ports and wharves.

On Mobilizing and Allocating Investment Capital

Currently, mobilizing sufficient financial resources for developing infrastructure, especially transport infrastructure, is essential for achieving the objectives outlined in the 2011-2020 Socio-Economic Development Strategy (which identified infrastructure development as one of three main pillars to support sustainable economic growth).

Therefore, strategic solutions are needed to diversify financial resources for infrastructure development, including transport infrastructure. Diversifying funding sources allows the government to mobilize more capital for infrastructure, reduce capital costs, and create opportunities for more investors to participate in the infrastructure sector.

ODA and preferential capital that Vietnam mobilizes should be prioritized for supporting the development of socio-economic infrastructure, with transport, energy, and industrial sectors, environment, and urban development accounting for 60%-70%.

Basic solutions for effective capital utilization include: gradually reducing reliance on budget support, using public investment capital as seed capital to attract other sources, especially private capital. As foreign aid preferences diminish, creating mechanisms to encourage private sector participation becomes necessary.

Additionally, as transport infrastructure investment requires significant financial resources and long timeframes, establishing a reasonable risk-sharing mechanism among parties in PPP infrastructure projects is essential, applying risk mitigation tools like guarantees and insurance to help investors feel more confident. Legalizing principles for risk-sharing mechanisms and applying risk mitigation tools in PPP projects is necessary to boost private sector confidence in participating in PPP projects.

Source: https://kinhtevadubao.vn/thuc-trang-phat-trien-he-thong-ket-cau-ha-tang-giao-thong-logistics-tai-viet-nam-28805.html

Share this article