Vietnam's deepwater port expected to have knockon effect in Cambodia

Written by Hor Hab

Thursday, 11 June 2009 Phnom Penh Post

New port outside Ho Chi Minh City will see rerouting of region's sea routes, analysts say, giving Cambodia greater role in links to North America and reduced shipping cost Photo by: NGUON SOVAN Sihanoukville Autonoumous Port may see reduced traffic, analysts said, due to higher-priced handling costs and competition from Phnom Penh’s port, but overall Cambodia is expected to benefit from Cai Mep. THE June 1 opening of Vietnam's first deepwater port in Cai Mep, outside of Ho Chi Minh City, will benefit Cambodia's sea transportation by reducing transit periods and cutting costs, the shipping industry says. MOL America, one of the world's largest transportation companies, said Monday in a press release that it would ship via Phnom Penh to Cai Mep instead of going to Singapore to cut North American shipping times by up to 10 days. "Direct barge service to Ho Chi Minh [City] will reduce intermodal travel, while completely eliminating the need for feeder services and trans-shipping in Singapore," it said. "In addition to reduced transit times, customers will also experience cost savings." As well as increased through traffic, the main benefits for Cambodia, said Hei Bavy, general director of Phnom Penh Autonomous Port, is that exports from the Kingdom would also no longer have to rely solely on Hong Kong and Singapore - vessels can now travel directly from the southern Vietnamese port to North America, while large vessels will also be able to dock closer to Cambodia, also cutting costs for domestic businesses. There will be some effect ... but the level of impact is not yet known. "With the new deepwater terminal in South Vietnam, we can save about three to four days [in travel time] and US$300 per container by not transiting through Singapore Port, instead leaving directly from Vietnam Deepwater Terminal to the United States and Europe," Hei Bavy said. Phnom Penh Autonomous Port would likely see an upswing in traffic as a result, he added - due to its status as the capital and centre for the transportation of goods - while Sihanoukville Autonomous Port could be expected to see a drop in activity. Sihanoukville also has higher handing fees than competing ports, analysts said, including the new Vietnamese deepwater port. Phnom Penh sees about 15 percent of Cambodia's container traffic with Sihanoukville accounting for 75 percent and the remainder passing overland. Sihanoukville port offers roughly double the capacity of Phnom Penh. Lou Kim Chhun, director general of Sihanoukville Autonomous Port, said Cai Mep could result in a drop in traffic at Cambodia's busiest port - admitting he was concerned - but that preparations had been made to boost cooperation and competitiveness. "We have also shipped containers to Ho Chi Minh City, so it won't affect us much because we can transit to Ho Chi Minh City instead of going through Singapore or Hong Kong," he said. Lower costs and faster services would likely prove an incentive for more companies in Cambodia to use shipping services overall, said Hei Bavy. Phnom Penh Port had aimed to increase traffic by 20 percent in 2009 year-on-year on the 50,000 containers that passed through the capital, he said. With the opening of Vietnam's port, Hei Bevy said he hopes that this target will be surpassed. Port expansion Phnom Penh is planning to expand capacity by targeting a loan from China to develop a new port location that would see just 25 percent of traffic going through the capital housed at the original Phnom Penh port, he said, adding that it was a five- to 10-year plan to bring port services closer to businesses in Cambodia in a bid to boost economic activity. Overland transport would also rise as Cambodia sees an increase in through transit due to its strategic position close to the Cai Mep port, So Nguon, director of So Nguon Group and So Nguon Transportation and Service Import-Export, said Wednesday. "Imports and exports - especially garment raw materials and products - will increase considerably," he said, adding he expected overland traffic to rise by up to 15 percent. Cambodia and Vietnam this year agreed to facilitate cross-border trade by permitting the checking of cargo on just one side of the frontier. "We can save about five days ... if we compare the period of transiting from Sihanoukville Port to Singapore before heading to US markets, but we do not yet know the costs," said So Nguon. He said he did not expect Sihanoukville port to be significantly affected due to the realignment of trade routes in the region following the opening of Cai Mep. Sin Chanthy, general secretary of Cambodia Freight Forwarders Association, said that in the current economic climate, the opening of Cai Mep was good news given that it would cut costs and increase efficiency. It was still to early too tell how significant the new Vietnamese port would be for Cambodia, however, he said. "There will be some effect on Cambodia's seaports, but the level of impact is not yet known because we have to wait and see what will happen in the next two or three months," said Sin Chanthy.