Vietnam’s Cai Mep-Thi Vai port operators are posting massive losses due to under capacity and cutthroat competition.
Terminals in the Cai Mep-Thi Vai area in the southern province of Ba Ria-Vung Tau are reportedly suffering losses amounting to millions of dollars a year due to low throughput volume. The situation is being exacerbated by the undercutting of handling rates by terminal operators in an effort to boost earnings, according to a report published on the Vietnam Seaports Association’s Web site.
The port complex was originally envisioned as an alternative international gateway in the southern region to Ho Chi Minh City’s ports. However, cargo is still mostly handled by the city’s ports.
The slow business at the Cai Mep-Thi Vai area has prompted port operators to lower their rates substantially to attract vessels.
Nguyen Xuan Ky, deputy director of Cai Mep International Port, said investors had gone into the port project assuming that loading rates would be at US$55 to $60 per 20-foot-equivalent unit (TEU). Instead, rates have plummeted to below $40 per TEU, he said.
“With this price, most ports are suffering losses,” Nguyen was quoted by local media as saying.
The Ministry of Finance last month proposed setting a minimum rate for loading services at the port. But port operators said this was just a short-term measure. They added that the slow infrastructure development around the port was one of the major deterrents to its appeal.
The expansion of the National Road 51 connecting Cai Mep-Thi Vai to other provinces like Dong Nai and Binh Duong, home to thousands of companies, remains incomplete after three years, while the construction of internal roads at the Cai Mep-Thi Vai complex is dragging due to funding problems, the operators said.
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