Q3 2015
www.bmiresearch.com

VIETNAM
FREIGHT TRANSPORT REPORT
INCLUDES 5-YEAR FORECASTS TO 2019

ISSN 1750-5364
Published by:BMI Research


Vietnam Freight Transport Report Q3 2015
INCLUDES 5-YEAR FORECASTS TO 2019

Part of BMI’s Industry Report & Forecasts Series
Published by: BMI Research
Copy deadline: April 2015

BMI Research
Senator House
85 Queen Victoria Street
London
EC4V 4AB
United Kingdom
Tel: +44 (0) 20 7248 0468
Fax: +44 (0) 20 7248 0467
Email:
Web:

© 2015 Business Monitor International Ltd
All rights reserved.

All information contained in this publication is
copyrighted in the name of Business Monitor
International Ltd, and as such no part of this
publication may be reproduced, repackaged,
redistributed, resold in whole or in any part, or used
in any form or by any means graphic, electronic or
mechanical, including photocopying, recording,
taping, or by information storage or retrieval, or by
any other means, without the express written consent
of the publisher.

DISCLAIMER
All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of
publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor
International Ltd accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the
publication. All information is provided without warranty, and Business Monitor International Ltd makes no representation of warranty of any kind
as to the accuracy or completeness of any information hereto contained.



Vietnam Freight Transport Report Q3 2015

CONTENTS
BMI Industry View ............................................................................................................... 7
SWOT .................................................................................................................................... 9
Freight Transport ...................................................................................................................................... 9
Political ................................................................................................................................................. 11
Economic ............................................................................................................................................... 12

Industry Forecast .............................................................................................................. 14

Trade Forecast ........................................................................................................................................ 14
Table: Trade Overview (Vietnam 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Table: Key Trade Indicators (Vietnam 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Table: Main Import Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Table: Main Export Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Road Freight Forecast .............................................................................................................................. 20
Table: Road Freight (Vietnam 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Rail Freight Forecast ............................................................................................................................... 23
Table: Rail Freight (Vietnam 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Air Freight Forecast ................................................................................................................................ 25
Table: Air Freight (Vietnam 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Company Profile ................................................................................................................ 29
Vietnam Airlines Cargo ............................................................................................................................ 29

Political Outlook ................................................................................................................ 32
Domestic Politics ..................................................................................................................................... 32
Table: Vietnam Political Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Long-Term Political Outlook ..................................................................................................................... 36

Oil Price Outlook ............................................................................................................... 41
Global - Crude Oil, Refined Fuels And Natural Gas Prices, 10-year Forecasts .................................................... 41
Table: Energy Price Forecasts, 2013-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Table: Energy Price Forecasts, 2019-2024 ( Global 2019-2024) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Macroeconomic Forecasts ............................................................................................... 44

Economic Analysis ................................................................................................................................... 44
Table: Economic Activity (Vietnam 2010-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Demographic Forecast ..................................................................................................... 49
Table: Population Headline Indicators (Vietnam 1990-2025) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Table: Key Population Ratios (Vietnam 1990-2025) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Table: Urban/Rural Population & Life Expectancy (Vietnam 1990-2025) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Table: Population By Age Group (Vietnam 1990-2025) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Table: Population By Age Group % (Vietnam 1990-2025) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

© Business Monitor International Ltd

Page 4


Vietnam Freight Transport Report Q3 2015

Methodology ...................................................................................................................... 54
Industry Forecast Methodology ................................................................................................................ 54
Sector-Specific Methodology .................................................................................................................... 55
Sources ................................................................................................................................................ 57

© Business Monitor International Ltd

Page 5



Vietnam Freight Transport Report Q3 2015


BMI Industry View
BMI View: We continue to believe that the Vietnamese economy is set to perform strongly in 2015, due to
continued strong foreign direct investment (FDI), healthy export growth and ongoing efforts by the
government to improve macroeconomic fundamentals. In turn, the country's freight industry is set to benefit
as a result. The outperformers in terms of mode will be inland waterways and road freight, due to consumer
demand rising in Vietnam on the back of falling fuel prices and easier monetary policy and still-strong
fiscal spending plans by the government.

Vietnam and South Korea have concluded negotiations for a bilateral free trade agreement (FTA), which
seeks to triple bilateral trade turnover to USD70bn by 2020, offering potentially significant upside risk over
the medium to long term. The anticipated bounce from the FTA is an integral reason why we anticipate
export growth in Vietnam to perform strongly over our medium term forecast period, growing by an
average 6.52% y-o-y between 2015 and 2019. In 2015, total trade real growth will come in at 6.65%, with
imports outperforming exports.

Vietnam is poised to post strong private consumption growth of 6.5% in 2015, which is unchanged from last
year. The country's consumers will benefit from lower oil prices, easier monetary policy and still-strong
fiscal spending plans by the government, boosting the road freight mode in 2015. Moreover, Vietnam's
exchange rates have shown a reasonable amount of resilience in the first half of 2015, which will help to
conserve consumers' purchasing power, again, providing a boost to road freight. This will see growth for
consumer-related goods such as passenger vehicles, mass grocery and retail remain strong over the course
of 2015.

In 2015, we have pencilled in y-o-y growth of 3.40% for the air freight mode in Vietnam, which is down on
2014's estimated gains of 9.96%. Looking further ahead to the medium term, the Vietnamese air freight
sector will be buoyed by the news that two-way trade between India and Vietnam is anticipated to reach
USD20bn by 2020, according to Vietnam's Ambassador to India Ton Sinh Thanh. Vietnam's growing rice
exports could prove to be very popular with the Indian market, boosting air freight trade over the medium
term as a result.


Vietnam's rail freight industry is not set to enjoy the same level of annual tonnage growth in 2015 as last
year, as the country put years of contracting growth behind it to post double-digit growth. However, the
sector is now set to see positive growth both in 2015 and over the medium term as the manufacturing and
oil and gas sectors are both poised to spur on the freight mode through increased exports out of Vietnam.

© Business Monitor International Ltd

Page 7


Vietnam Freight Transport Report Q3 2015

Indeed, Vietnamese crude oil exports increased 27% y-o-y to 867,207 metric tonnes (mt) or 205,052 barrels
per day (b/d) in December 2014, according to data from Vietnam Customs, but state-owned PetroVietnam
is likely to reduce production from four of its oil fields to cut costs, underlining why we expect slower rail
freight growth in 2015.

Key BMI Forecasts:
■

We forecast total road freight volumes will rise by 7.75% y-o-y over 2015 to reach 880.14mn tonnes.

■

We forecast total rail freight volumes will grow by 3.40% year on year over 2015 to reach 7.42mn
tonnes.

■

We forecast total air freight volumes will rise by 3.40% year on year over 2015 to reach 208,700 tonnes.


■

We forecast total trade value to increase by 6.65% to reach USD319.27bn in 2015.

■

The top trade partners will be the US, China, Japan, South Korea and Germany.

© Business Monitor International Ltd

Page 8


Vietnam Freight Transport Report Q3 2015

SWOT
Freight Transport

Vietnam Freight Transport Industry SWOT Analysis

Strengths

■

Vietnam's strong domestic growth rate, coupled with its geography - it stretches for
thousands of kilometres on a north-south axis - creates a need for long-distance
freight haulage.

■


A recovery of activity levels at the nation's ports in 2010 is expected to continue over
the mid-term to 2018.

■

Vietnam's location on the South China Sea gives the country access to the main interAsian shipping routes, as well as access to the developing land transport links with
ASEAN countries, allowing the country scope to develop its trade logistics.

Weaknesses

■

The generally poor state of the road network. Despite new highway construction, only
13.5% of the network is considered to be in good condition. Just 26% of the network
has two or more lanes and only 29% is tarred.

■

Traditionally low investment in rail, with the potential for cost-effective bulk rail freight
being underutilised.

■

Decades of under-investment have left the country with a port infrastructure system
that is poor by international standards.

■

Overcapacity is a growing problem.


■

Unresolved business environment issues and lack of significant improvement in
access to infrastructure financing means that we remain very conservative on the
growth potential of Vietnam's freight sector.

■

A slowdown affecting the US economy has a knock-on effect on Vietnam due to it
being the Asian country's largest export partner.

Opportunities

■

The beginnings of local commercial vehicle production, which will help improve the
stock of lorries used by road haulage companies.

© Business Monitor International Ltd

Page 9


Vietnam Freight Transport Report Q3 2015

Vietnam Freight Transport Industry SWOT Analysis - Continued
■

Chinese investment could bring about much-needed improvements in the rail sector.


■

Growing international interest in Vietnam as a growth market within the box shipping
sector.

■

The World Bank stated at the start of 2014 that improved infrastructure could improve
the country's economy substantially.

■

Vietnamese Transport Minister Dinh La Thang wishes to see the government help
boost inland waterway facilities and has been formulating policies likely to attract
investments in the sector.

Threats

■

Vietnam risks losing out to neighbouring countries if it is unable to develop its
infrastructure to keep up with the pace of demand.

■

Vietnam is vulnerable to any slowdown in Chinese investment and to political risk in
the sensitive South China Sea, subject to competing sovereignty claims.

■


A drop in international demand for exports would negatively affect Vietnam's freight
transport sector.

© Business Monitor International Ltd

Page 10


Vietnam Freight Transport Report Q3 2015

Political
SWOT Analysis

Strengths

■

The Communist Party of Vietnam remains committed to market-oriented reforms and
we do not expect major shifts in policy direction over the next five years. The oneparty system is generally conducive to short-term political stability.

■

Relations with the US have witnessed a marked improvement, and Washington sees
Hanoi as a potential geopolitical ally in South East Asia.

Weaknesses

■


Corruption among government officials poses a major threat to the legitimacy of the
ruling Communist Party.

■

There is increasing (albeit still limited) public dissatisfaction with the leadership's tight
control over political dissent.

Opportunities

■

The government recognises the threat corruption poses to its legitimacy, and has
acted to clamp down on graft among party officials.

■

Vietnam has allowed legislators to become more vocal in criticising government
policies. This is opening up opportunities for more checks and balances within the
one-party system.

Threats

■

Although strong domestic control will ensure little change to Vietnam's political scene
in the next few years, over the longer term, the one-party-state will probably be
unsustainable.

■


Relations with China have deteriorated over recent years due to Beijing's more
assertive stance over disputed islands in the South China Sea and domestic criticism
of a large Chinese investment into a bauxite mining project in the central highlands,
which could potentially cause wide-scale environmental damage.

© Business Monitor International Ltd

Page 11


Vietnam Freight Transport Report Q3 2015

Economic
SWOT Analysis

Strengths

■

Vietnam has been one of the fastest-growing economies in Asia in recent years, with
GDP growth averaging 6.6% annually between 2000 and 2013.

■

The economic boom has lifted many Vietnamese out of poverty, with the official
poverty rate in the country falling from 58% in 1993 to 17.2% in 2012.

■


Vietnam has been strengthening its trade and aid ties in a bid to increase exports and
diversify its export sector.

Weaknesses

■

Vietnam still suffers from fiscal deficits, leaving the economy vulnerable to global
economic uncertainties. The fiscal deficit is dominated by substantial spending on
social subsidies that could be difficult to withdraw.

■

The heavily-managed and weak currency reduces incentives to improve quality of
exports, and also keeps import costs high, contributing to inflationary pressures.

Opportunities

■

WTO membership and the upcoming ASEAN economic integration in 2015 should
give Vietnam greater access to both foreign markets and capital, while making
Vietnamese enterprises stronger through increased foreign competition.

■

The government has continued to move forward with market reforms, including
privatisation of state-owned enterprises, addressing the high level of bad loans in the
banking sector as well as liberalising the banking sector.


■

Urbanisation will continue to be a long-term growth driver. The UN forecasts the
urban population rising from 32% of the population in 2013 to more than 50% by the
early 2040s.

Threats

■

Although inflation has subsided in 2014, complacency by the State Bank of Vietnam
on this front could result in a decline in investment.

■

The potential for an escalation of political tensions with China over sovereign claims
to parts of the South China Sea could have a negative impact on the economy.

© Business Monitor International Ltd

Page 12


Vietnam Freight Transport Report Q3 2015

SWOT Analysis - Continued
■

Market reforms could progress at a much slower pace as the government remains
cautious about ceding ownership to foreign investors.


© Business Monitor International Ltd

Page 13


Vietnam Freight Transport Report Q3 2015

Industry Forecast
Trade Forecast
BMI View: Vietnamese export growth is set to grow in 2015 as a stronger US economy and continued
inflows of foreign direct investment (FDI) to Vietnam's manufacturing sector dovetail to see export growth
of 8.3%. That said, exports will likely underperform the 13.6% nominal growth pace set in 2014 owing to
the weak euro and the ongoing regional economic slowdown, which temper our freight forecasts as a result
- the air and rail freight sectors are set to see year-on-year tonnage throughput decrease in 2015 compared to
12 months previous.

In terms of geographical breakdown, we believe the US market will be the key to sustaining robust export
growth in Vietnam over the coming quarters amid ongoing regional headwinds. Indeed, the US remains the
largest destination for Vietnamese exports, receiving 19.8% of the total in the first four months of 2015.
While there was a poor run of economic data from the US in the month of April, we nevertheless expect the
US economy to continue its recovery amid a healing labour market and weak global oil prices. Recovering
US consumer confidence will in turn provide a boost to demand for Vietnamese goods, particularly for
textiles and garments. In Q1 2015, the 'textiles and garments' category grew by 7.8% y-o-y to USD4.8bn,
which is, by extension, welcome news to the air freight mode as it will be via air, as well as sea, that these
exports are transported. The US accounted for 17.6% of all exports out of Vietnam in 2013 (latest available
data), which underlines the importance of the US market to Vietnamese freight modes.

While the US economy appears to be back on its feet, the regional economic slowdown in Vietnam's other
key trading partners, particularly China, Japan and South Korea, will act as a drag on Vietnamese export

growth, thus resulting in export growth in 2015 dipping slightly on 2014's 5.92% y-o-y gains. Indeed,
China, Japan and South Korea received a combined 23.8% of the total for the first four months of 2015.
Growth in exports to these major trading partners will likely be negatively impacted by ongoing general
weakness in these economies. In China, ongoing economic rebalancing efforts by the Chinese government
will continue to slow growth in the world's second largest economy. Import growth in China contracted by
12.3% y-o-y in March, reflecting the economic slowdown in recent quarters. Meanwhile, attempts to revive
the Japanese economy appear to have fallen short, with real household income and industrial production
growth remaining rather lacklustre.

The ability to attract strong foreign direct investment (FDI) inflows to the manufacturing sector is another
factor that will keep the Vietnamese export sector vibrant. The exports of manufactured goods are set to
grow by 6.98% in 2015. Well-known multinational companies like Samsung (one of the largest foreign

© Business Monitor International Ltd

Page 14


Vietnam Freight Transport Report Q3 2015

investors in Vietnam) and Procter and Gamble are increasing their investment in the country, which will
only benefit the freight industry, in particular air freight as goods are flown out to more developed
countries. In particular, Samsung (through its various subsidiaries) is running several large scale projects in
Vietnam, including the construction of a second smartphone factory worth USD3.0bn in the northern
province of Thai Nguyen and a USD1.0bn production plant in the province of Bac Ninh to manufacture
LCD screens. According to the Ministry of Planning and Investment, registered capital investment from the
South Korean giant is estimated to hit USD20.0bn by 2017. The total investment from Samsung in the
country currently stands at around USD11.0bn.

Strong Growth Ahead

Imports and Exports Value (USDbn) (2013-2019)
600

400

200

Vietnam - Imports, USDbn

2019f

2018f

2017f

2016f

2015f

2014

2013

0

Vietnam - Exports, USDbn

National statistics agency

Medium Term


In welcome news for the Vietnamese freight industry, Vietnam and South Korea have concluded
negotiations for a bilateral free trade agreement (FTA) during a meeting between Vietnamese Prime
Minister Nguyen Tan Dung and South Korean President Park Geun-hye on the sidelines of the ASEANKorea Commemorative Summit. The FTA seeks to triple bilateral trade turnover to USD70bn by 2020. The

© Business Monitor International Ltd

Page 15


Vietnam Freight Transport Report Q3 2015

FTA covers 17 areas, including products, services and investment and intellectual property; however, it
excludes rice, a sensitive product for Korean farmers, as reported by the Korea Times. The two Asian
nations have held nine rounds of FTA talks since August 2012, reported Thanh Nien News. If Vietnam and
South Korea can appease farmers in the latter country, the former is set to benefit from its large rice exports.
The anticipated bounce from the FTA is one of the key reasons why we see export growth in Vietnam
performing strongly over our medium term forecast period, growing by an average 6.52% y-o-y between
2015 and 2019.

Long Term

Coal production will remain the overwhelming power source of choice, most notably in China and India,
and with Vietnam exporting significant amounts of coal, it is well placed to benefit from growing demand
over the long term. Not only is coal the cheapest option, but it is relatively abundant, scalable and has a
faster turnaround than other fuel sources. We forecast that despite rising environmental concerns, by 2024,
coal will still account for approximately 70.0% of China's energy mix, down only marginally from about
73.0% currently. Although coal will remain the power source of choice, we do expect policy changes to
boost growth in nuclear and renewable energy sources over the next decade.


With Europe being the second largest export destination for Vietnamese goods (receiving 18.8% of the total
for the first four months of 2015), weakness in the euro will undoubtedly weigh on European demand for
Vietnam's exports going forward, a situation that has occurred in the first half of 2015. The euro has
depreciated against the Vietnamese dong by about 20% since May 2014, making Vietnamese goods more
expensive in euro terms and this is a scenario that could worsen in future, affecting demand for Vietnamese
goods and thus having a detrimental effect on the country's freight modes, in particular air freight.

Table: Trade Overview (Vietnam 2012-2019)

2012

2013

2014

2015f

2016f

2017f

2018f

2019f

Imports, real growth, % y-o-y

9.09

7.90


7.50

7.50

7.30

7.20

7.00

7.00

Exports, real growth, % y-o-y

15.71

6.00

5.92

5.80

6.20

6.60

6.80

7.20


Total Trade, real growth, % y-o-y

12.40

6.95

6.71

6.65

6.75

6.90

6.90

7.10

118.98

133.50

147.57

159.94

178.12

202.18


229.09

259.36

5.86

12.20

10.54

8.38

11.37

13.51

13.31

13.21

124.43

137.15

149.38

159.34

175.63


198.25

224.21

254.31

16.46

10.22

8.92

6.66

10.23

12.88

13.10

13.42

243.41

270.65

296.96

319.27


353.75

400.43

453.30

513.67

Imports, USDbn
Import growth, % y-o-y
Exports, USDbn
Export growth, % y-o-y
Total trade, USDbn

© Business Monitor International Ltd

Page 16


Vietnam Freight Transport Report Q3 2015

Trade Overview (Vietnam 2012-2019) - Continued

Total trade growth, % y-o-y

2012

2013


2014

2015f

2016f

2017f

2018f

2019f

11.03

11.19

9.72

7.51

10.80

13.20

13.20

13.32

e/f = BMI estimate/forecast. Source: General Statistics Office of Vietnam, BMI


Table: Key Trade Indicators (Vietnam 2012-2019)

2012

2013e

2014e

2015f

2016f

2017f

2018f

2019f

Agricultural raw
materials,
exports,
USDmn

4,401.58

4,499.68

5,014.91

5,467.44


6,490.51

7,118.30

8,468.63

9,353.99

Agricultural raw
materials,
exports, % y-oy

4.24

2.23

11.45

9.02

18.71

9.67

18.97

10.45

Agricultural raw

materials,
imports,
USDmn

3,430.55

4,624.12

5,036.73

5,372.49

5,796.29

6,648.59

7,396.26

8,490.14

Agricultural raw
materials,
imports, % y-oy

-17.16

34.79

8.92


6.67

7.89

14.70

11.25

14.79

Ores and
metals, exports,
USDmn

980.08

1,095.55

1,199.83

1,284.69

1,423.20

1,616.30

1,834.96

2,093.42


Ores and
metals, exports,
% y-o-y

21.28

11.78

9.52

7.07

10.78

13.57

13.53

14.09

Ores and
metals, imports,
USDmn

4,262.93

5,364.30

5,969.23


6,500.53

7,155.36

8,278.82

9,305.92

10,684.77

Ores and
metals, imports,
% y-o-y

-6.13

25.84

11.28

8.90

10.07

15.70

12.41

14.82


2,203.39

2,609.31

2,874.67

3,090.60

3,494.49

3,949.34

4,553.87

5,182.44

-1.40

18.42

10.17

7.51

13.07

13.02

15.31


13.80

8,471.23 10,158.45 11,251.96

12,212.37

12,952.95

15,295.55

16,716.99

19,470.02

8.54

6.06

18.09

9.29

16.47

Iron and steel,
exports,
USDmn
Iron and steel,
exports, % y-oy
Iron and steel,

imports,
USDmn
Iron and steel,
imports, % y-oy

17.23

19.92

© Business Monitor International Ltd

10.76

Page 17


Vietnam Freight Transport Report Q3 2015

Key Trade Indicators (Vietnam 2012-2019) - Continued

2012
Manufactured
goods, exports,
USDmn

2014e

2015f

2016f


2017f

2018f

2019f

71,085.40 77,803.42 85,108.55

91,052.85

102,058.29

114,660.13

131,471.98

148,647.29

9.39

6.98

12.09

12.35

14.66

13.06


80,785.92 89,399.19 98,858.27

107,166.05

119,292.63

135,532.23

153,510.65

173,917.43

10.58

8.40

11.32

13.61

13.27

13.29

16,530.36 17,377.78 18,781.64

19,923.99

21,088.00


24,185.26

26,537.19

30,368.73

8.08

6.08

5.84

14.69

9.72

14.44

15,190.13 16,042.55 17,763.66

19,275.28

21,413.17

24,416.26

27,667.09

31,388.04


8.51

11.09

14.02

13.31

13.45

Manufactured
goods, exports,
% y-o-y
Manufactured
goods, imports,
USDmn

14.31

Manufactured
goods, imports,
% y-o-y
Fuels, exports,
USDmn

9.20

Fuels, exports,
% y-o-y

Fuels, imports,
USDmn

2013e

9.45

10.66

50.17

Fuels, imports,
% y-o-y

21.22

5.13

5.61

10.73

e/f = BMI estimate/forecast. Source: UNCTAD, BMI

Table: Main Import Partners

2006

2007


2008

2009

2010

2011

2012

2013

7,391

12,710

15,974

16,441

20,019

24,594

28,786

53,458

16.5


20.3

19.8

23.5

24.0

23.5

25.8

31.9

3,908

5,340

7,255

6,976

9,761

13,176

15,536

23,196


8.7

8.5

9.0

10.0

11.7

12.6

13.9

13.8

6,274

7,614

9,378

4,248

4,101

6,391

6,690


11,978

14.0

12.1

11.6

6.1

4.9

6.1

6.0

7.1

4,702

6,189

8,240

7,468

9,016

10,400


11,603

11,575

10.5

9.9

10.2

10.7

10.8

10.0

10.4

6.9

1,441

1,951

2,633

826

860


970

970

8,315

3.2

3.1

3.3

1.2

1.0

0.9

0.9

5.0

TOTAL

44,891

62,765

80,714


69,949

83,365 104,510

111,640

167,791

TOTAL, top 5 countries, USDm

23,717

33,804

43,480

35,960

43,758

63,584

108,521

China, Mainland, USDmn
China, Mainland, USDmn, % of
total
Korea, Republic Of, USDmn
Korea, Republic Of, USDmn, % of
total

Singapore, USDmn
Singapore, USDmn, % of total
Japan, USDmn
Japan, USDmn, % of total
China,P.R.:Hong Kong, USDmn
China,P.R.:Hong Kong, USDmn, %
of total

© Business Monitor International Ltd

55,530

Page 18


Vietnam Freight Transport Report Q3 2015

Main Import Partners - Continued

% from top 5 trade partners

2006

2007

2008

2009

2010


2011

2012

2013

52.8

53.9

53.9

51.4

52.5

53.1

57.0

64.7

Source: IMF. N.B. Total exports is from Direction of Trade Statistics, consequently there may be some discrepancy with
data used elsewhere in this report.

Table: Main Export Partners

2006


2007

2008

2009

2010

2011

2012

2013

7,845

10,105

11,887

11,356

14,238

16,928

19,668

22,930


19.7

20.8

19.0

19.9

20.4

18.2

17.8

17.6

3,243

3,646

4,850

4,909

7,309

11,125

12,388


15,351

8.1

7.5

7.7

8.6

10.5

12.0

11.2

11.8

5,240

6,090

8,468

6,292

7,728

10,781


13,060

12,917

Japan, USDmn, % of total

13.2

12.5

13.5

11.0

11.1

11.6

11.8

9.9

Korea, Republic Of, USDmn

843

1,243

1,794


2,065

3,092

4,715

5,580

6,523

Korea, Republic Of, USDmn, %
of total

2.1

2.6

2.9

3.6

4.4

5.1

5.0

5.0

1,445


1,855

2,073

1,885

2,373

3,367

4,095

5,683

3.6

3.8

3.3

3.3

3.4

3.6

3.7

4.4


TOTAL

39,826

48,561

62,685

57,196

69,820

92,881

110,795

130,551

TOTAL, top 5 countries, USDm

18,616

22,939

29,072

26,507

34,740


46,916

54,792

63,403

46.7

47.2

46.4

46.3

49.8

50.5

49.5

48.6

United States, USDmn
United States, USDmn, % of
total
China, Mainland, USDmn
China, Mainland, USDmn, % of
total
Japan, USDmn


Germany, USDmn
Germany, USDmn, % of total

% from top 5 trade partners

Source: IMF. N.B. Total exports is from Direction of Trade Statistics, consequently there may be some discrepancy with
data used elsewhere in this report

© Business Monitor International Ltd

Page 19


Vietnam Freight Transport Report Q3 2015

Road Freight Forecast
BMI View: In terms of the domestic picture, we forecast private consumption in Vietnam, lower levels of
inflation, easier monetary policy and lower oil prices will boost consumers' purchasing power, which will
prove beneficial for the road freight sector in Vietnam. Therefore, y-o-y growth in terms of tonnage
transported by road is set to remain elevated, coming in at a forecast 7.75% in 2015, up on 2014's 6.77%.
On the other hand, however, the recent sell off in many emerging market currencies, combined with a
regional slowdown in aggregate real GDP growth will partially offset some of the tailwinds.

Vietnam will see private consumption remain broadly the same in 2015, which is why our road freight
tonnage handled forecast for the year does not differ so much from 2014. The rise in this mode will
predominantly occur due to lower fuel prices for truckers.

The Vietnamese economy is currently resting on a growth-inflation sweet spot, with consumer price
inflation (CPI) coming in at just 0.9% y-o-y in March (in part owing to the slump in global oil prices) versus

the peak of 23.0% in August 2011. Price stability and positive economic growth prospects will lend support
to the Vietnamese dong, while a richer domestic consumer continues to benefit the road freight sector,
hence our healthy growth forecast over the short term. The confluence of these factors will restore and shore
up investor confidence, enhancing Vietnam's attractiveness as a place to invest and do business in, which
should have a knock on effect on infrastructure, which could mean enhanced facilities for truckers and,
therefore, a boost for the road freight sector.

In line with our positive outlook for the Vietnamese economy, real GDP growth came in at 6.0% year-onyear (y-o-y) in Q1 2015. While the latest reading represented a slowdown from the 7.0% headline figure in
the previous quarter, the economy nevertheless remains on a very strong growth trajectory and with the
Vietnamese road freight sector carrying the bulk of cargo, it is in a healthy position as a result.

© Business Monitor International Ltd

Page 20


Vietnam Freight Transport Report Q3 2015

GDP Growth To Remain High
GDP Per Capita (USD) (% change) (2013-2024)
6,000

12.5

4,000

10

2,000


7.5

2024f

2023f

2022f

2021f

2020f

2019f

2018f

2017f

2016f

2015f

2014

5
2013

0

Vietnam - GDP per capita, USD (LHS)

Vietnam - GDP per capita, USD, % y-o-y (RHS)

f = BMI forecast. Source: General Statistics Office, Asian Development Bank, BMI

Medium Term

Over our forecast period to 2019, we expect to see y-o-y average growth to come in at a healthy 7.79%, as
the sector goes from strength to strength. This is predicated on a glowing consumer picture, as well as
Vietnam's rising stature as an attractive place for investment. Looking ahead, we expect the economy to
continue growing robustly, on the back of greater foreign direct investment (FDI) inflows and ongoing
efforts by the government to improve the country's business conditions, which will all boost the road freight
sector as demand grows and increased investment improves Vietnam's reputation as a place to do business
in Asia.

While total registered capital of newly licensed projects contracted 14.3% y-o-y to USD712.3mn in the first
two months of 2015 despite the 85.8% y-o-y increase in January, we believe the weak February
performance will likely be transient. Informing our still positive outlook for investment growth are the
reported plans by several large foreign enterprises to develop big projects in the country in 2015, which are
positive signs for the road freight sector as this mode will continue to be the largest transporter of goods in

© Business Monitor International Ltd

Page 21


Vietnam Freight Transport Report Q3 2015

Vietnam for the foreseeable future. Notably, Samsung (one of the leading foreign investors in Vietnam) has
plans to invest in energy, shipbuilding and other infrastructure developments in the country through its
various subsidiaries, with total investment reported to be around USD20.0bn. It is also looking to expand its

mobile phone production capacity over the coming quarters. In addition, another multinational company,
Procter and Gamble, will expand its footprint in Vietnam through setting up a USD100.0mn factory at the
Vietnam-Singapore Industrial Park in the Binh Duong province that will manufacture razors for its Gillette
brand.

Long Term

Vietnamese President Trưưng Tưn Sang stated on March 20 that his country values the growing relationship
with Thailand, which he believes will flourish in the coming years. Thailand is not currently one of
Vietnam's top five trade partners, but stronger links could change this over the long term, benefitting the
latter's road freight industry as a result. Speaking at a reception hosted for Thai Deputy Prime Minister and
Foreign Minister Thanasak Patimapragorn in Vietnamese capital city Hanoi, Sang lauded the outcome of
the meeting of the Joint Committee on bilateral cooperation. Sang also expressed his gratitude to Thailand
for paying attention to the needs of the Vietnamese community in Thailand, saying that he hopes a bilateral
labour deal will be signed soon. Sang noted that the economic ties between the two nations were developing
strongly with many large Thai firms investing in the country, reported Intellasia/Vietnamnet.

Over the longer term, the Vietnamese government's decision to introduce tighter regulation to clamp down
on overloaded trucks, which will now result in firms having to procure additional vehicles to transport their
cargo, should promote driver safety and make the road freight sector more attractive as a direct
consequence. The decision by Vietnam's Ministry of Transport (MOT) to increase control and oversight of
overloaded vehicles so as to ensure driver safety is a positive development for the commercial vehicle (CV)
sector.

Previously, many truck owners had registered their vehicles to carry far less weight than the actual load
transported. Subsequently, these overloaded trucks contributed to traffic accidents and caused damage to
roads. Since April however, the MOT has clamped down on these errant practices and initial signs show
that the policy has been successful, with the number of traffic accidents declining since then.

Furthermore, the MOT's stricter regulation has made the truck market more competitive. According to an

official from the ministry, as many as 60% of container trucks owned by local firms will be ineligible to

© Business Monitor International Ltd

Page 22


Vietnam Freight Transport Report Q3 2015

transport containers under the new policy. This has resulted in transport firms having to buy or arrange for
alternative vehicles, which are suitable to carry their goods.

Table: Road Freight (Vietnam 2012-2019)

2012
Road
Freight
Tonnes
(000)

2013

2014

2015f

2016f

2017f


2018f

2019f

722,156.40 765,070.40 816,857.10 880,142.24 951,611.16

1,026,523.84

1,105,191.98

1,188,832.05

Road
freight
tonnes,
% y-o-y

10.40

5.94

6.77

7.75

8.12

7.87

7.66


7.57

Road
freight
tonneskm (mn
ton km)

43,902.40

46,790.70

48,146.60

49,928.02

51,925.15

53,924.26

56,027.31

58,128.33

Road
freight
tonneskm, %
y-o-y

9.40


6.58

2.90

3.70

4.00

3.85

3.90

3.75

e/f = BMI estimate/forecast. Source: General Statistics Office of Vietnam, BMI

Rail Freight Forecast
BMI View: Vietnam's rail freight industry in 2015 is not set to enjoy the same level of year-on-year
tonnage growth compared to 2014 as years of consecutive growth contractions were put behind the sector
to post double-digit growth; 3.40% is the 2015 forecast against 2014's 10.01% gains. This impressive
growth came predominantly as a result of large increases in Vietnamese crude oil exports (27% y-o-y to
867,207 metric tonnes (mt) or 205,052 barrels per day (b/d) in December 2014, according to data from
Vietnam Customs) and growth in the manufacturing sector.

From a production perspective, the strong showing in the first quarter was rather broad-based. In the
industry category, which accounted for 30.3% of nominal GDP in Q115, the manufacturing sector grew by
a robust 9.5% y-o-y, while construction growth came in at 4.4% y-o-y. We expect the manufacturing sector
to remain a key driver of growth over the coming quarters. The still relatively low labour costs in the
country despite the recent wage hike, the generous tax incentives the government has to offer, as well as the

ready supply of a young and dynamic workforce will greatly entice foreign manufacturing firms to invest

© Business Monitor International Ltd

Page 23


Vietnam Freight Transport Report Q3 2015

and set up their production plants in Vietnam, continuing to boost demand for rail freight services in the
country.

Vietnam exported 9.29mn mt of crude, up 10.5% y-o-y from January to December 2014. While the export
volume for December was 23.5% higher than November, the export value was 4.7% lower at USD414mn
compared with November 2013. Greater demand for crude has a positive knock-on effect on Vietnam's rail
freight sector, which is why we anticipate positive growth to remain in this freight mode both in 2015 and
over the medium term also.

Tempering our forecast, however, is the news that state-owned PetroVietnam is likely to reduce production
from four of its oil fields to cut costs, as expenses have exceeded prices.This scenario has resulted in BMI
deciding that double-digit growth seen in 2014 is unlikely to take place again in 2015.

Rail Freight Finally Back On Track
Rail Freight Tonnage (2006-2019)
10,000

15

10


7,500

5
5,000
0
2,500

-5

2019f

2018f

2017f

2016f

2015f

2014

2013

2012

2011

2010

2009


2008

2007

-10
2006

0

Vietnam - Rail freight tonnes ('000)
Vietnam - Rail freight tonnes, % y-o-y

National Statistics Agency

© Business Monitor International Ltd

Page 24


Vietnam Freight Transport Report Q3 2015

Medium Term
The expansion of Japan's K Line into Vietnam's logistics sector in 2014 could offer upside risks to the rail
freight sector going forward. The move is part of the company's wider strategy to reduce its exposure to the
container shipping sector by increasing its exposure to more profitable sectors, including logistics. Should
other firms follow suit, the rail freight mode could benefit and the mode is already set to perform steadily
over our forecast period, averaging y-o-y growth of 3.60% to 2019.

Long Term


Discoveries and foreign investments are encouraging signs for both Vietnam's gas production and
consumption growth prospects and, by extension, provide welcome news for rail freight as it is the mode
most concerned with heavy industry transportation. This is reflected in our optimistic growth forecast for
Vietnamese gas production and consumption. Nonetheless, gas prices and regional security pose risk to
further growth.

Table: Rail Freight (Vietnam 2012-2019)

2012
Rail freight tonnes ('000)

2018f

2019f

7,003.50 6,525.90 7,178.90 7,422.98 7,697.63 7,974.75 8,273.80

8,575.79

Rail freight tonnes, % y-o-y
Rail freight tonnes-km (mn ton
km)

-3.87

2013

5,066.79


12.96

3.00

3.70

2017f

4,024.60 3,804.10 4,297.20 4,426.12 4,567.75 4,723.06 4,893.09
-5.48

3.40

2016f

3.65

-3.30

10.01

2015f

3.75

Rail freight tonnes-km, % y-o-y

-6.82

2014


3.20

3.60

3.40

3.60

3.55

e/f = BMI estimate/forecast. Source: General Statistics Office of Vietnam, BMI

Air Freight Forecast
BMI View: We believe that the Vietnamese air freight sector will grow by 3.40% in 2015, while over our
forecast period to 2019 we anticipate annual gains to remain at a similar level, at 3.60% per annum.

Short Term

Vietnam's pharmaceutical industry, meanwhile, is currently facing challenges to compete with Indian drug
firms, according to state management agencies. With domestic firms preferring to import materials for drug

© Business Monitor International Ltd

Page 25