Seaport Companies in Vietnam Anticipating Export Growth

Vietnamese companies in the seaport industry have been recording positive business results despite the Covid-19 pandemic.

Mass Covid-19 vaccination campaigns have helped Vietnam’s major trade partners to reopen the economy. This will create favorable conditions to increase goods circulating through domestic seaports and airports, along with opportunities from the free trade agreements which Vietnam has signed.

A report by Viet Dragon Securities (VDSC), an investment advice company, the seaport industry maintains positive prospects thanks to the global Covid vaccination efforts, which strengthen trade prospects and increase goods circulated through seaports.

The total output of goods through seaports in Vietnam is expected to grow double-digit and achieve 15% in 2021 and 14% in 2022, respectively. The increase in container output is aided by the expectation of the recovery of industrial production.

VDSC’s forecast is based on the expectation that Vietnam will have provided Covid vaccination for 70% of the population by the end of the first quarter of 2022.

VDSC also underlines the increasing role of deep-sea ports in Vietnam’s seaport system in elevating the efficiency of ship companies and meeting the needs of transportation routes connecting Vietnam and its major trade partners. The market share of deep-sea ports and long-distance transportation routes is increasing.

Gemalink deep-sea port, the largest of its kind in Vietnam, is one of the 19 major ports in the world that can accommodate the largest mother vessels up to 200,000 DWT. Photo: Gemalink.gemadept.com.vn

On domestic container transportation, the surge in container output is aided by the expectation of the recovery of industrial production.

According to the Vietnam Maritime Administration, the total quantity of goods circulated through Vietnam’s seaports is expected to reach 587 million tons in the first 10 months of 2021, up 2% compared to the same period in 2020.

While the output of different goods via seaports is affected by the Covid-19 pandemics, container goods have maintained a double-digit growth with an estimation of approximately 20.3 million TEU in 10 months, up 12% compared to the same period in the previous year.

The Vietnam Maritime Administration noted that the government had been implementing effective outbreak control and issuing solutions to ensure socio-economic development. These are promising factors that can help to maintain the strong growth of goods circulated through seaports in the coming time.

According to the investment advice company BSC, an affiliation of the Joint Stock Commercial Bank for Investment and Development of Vietnam, the growth prospect will be divided amongst seaport companies, with the most visible growth observable amongst businesses in the Lach Huyen and Cai Mep-Thi Vai deep-sea port clusters.

The Master Plan on development of Vietnam's seaport system in the period 2021 – 2030 with the vision to 2050 specifies that a total investment capital of VND 313,000 billion will be reserved for developing synchronous, modern and high-quality seaport systems to meet socio-economic development needs.

The seaport system’s growth prospect is dependent on imports and exports. According to Agribank Securities, the export industries will observe positive recovery post-Covid when production is resumed after the supply chain is disrupted due to the fourth Covid outbreak.

Vietnamese companies in the seaport industry have been recording positive business results despite the Covid-19 pandemic. Photo: Vietnam+

The increasing global needs come from Vietnam’s major export markets such as the US and EU and Vietnam’s involvement in free trade agreements such as the Vietnam – EU Free Trade Agreement and the Vietnam-UK Free Trade Agreement. On this basis, Agribank Securities believes Vietnam’s export will continue to observe double-digit growth in the final quarter of 2021 and throughout 2022.

Experts from SSI Securities Corporation (SSI) noted the large-scale increase in transportation costs compared to early 2021, notably the North-South route (up 70-160%) and the Hai Phong – Hong Kong route (up 25%).

According to SSI, the need for container transportation is expected to gradually increase following extensive social distancing periods while container supply is scarce as numerous containerships in Vietnam have been rented out.

The combination of export growth and increasing transportation costs has benefited seaport companies.

Notably, the Hai An Transport and Stevedoring Joint Stock Company will maintain its growth rate despite the negative impacts of the pandemic on domestic transportation. SSI estimates that Hai An has recorded VND 80 billion in post-tax profits in the third quarter of 2021, up 3.7 times compared to the same period in 2020.

SSI also expects that deepsea freight transportation company Gemadept Corporation to keep its growth rate in the third quarter of 2021 to achieve a total profit of VND 174 billion, up 20% compared to the same period last year.

On the stock market, seaport companies have recorded an impressive increase in share prices thanks to positive business results and the prospect of the seaport industry. For instance, Gemadept recorded an increase of 52% in share price compared to the trading session in early 2021 (Jan. 4) and Hai An up 282%.

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