ROBUST INFRASTRUCTURE AND CUSTOMER DEMAND RESHAPE THE TRANSPORTATION MARKET

Recent robust infrastructure development and customer demand are reshaping the transportation market towards diversifying products and improving services quality, providing significant opportunities for railway and waterways which are holding modest market shares.

Statistics of the Ministry of Transport showed that railway holds a market share of less than 1 per cent, inland waterway less than 20 per cent, while the remainder of the transport sector is road and aviation.

However, after years of rapid growth road and air transport are facing issues of sustainability.

According to Lương Duyên Thống from the Department for Roads of Việt Nam, the number of contract transport vehicles has increased by 70 per cent since 2020. However, some are found not to comply with operational regulations, affecting the tax collection and investment efficiencies, while breaking the planning of transport routes and increasing the risk for traffic congestion and accidents.

The aviation industry of Việt Nam has been facing a serious shortage of aircrafts from the beginning of this year due to an engine recall of Pratt 7 Whitney for their PW1100 engines on A321Neo aircraft operated by Vietnam Airlines and Vietjet. Together with rising fuel costs, the aviation industry is under significant pressure.

In that context, railway and waterway transport have significant opportunities to expand market share.

During the holidays on April 30 and May 1, the number of railway passengers increased dramatically. The railway has been making efforts to improve both facilities and service quality and has emerged as a viable alternative to expensive air travel. The railway industry is also looking to increase the amount of freight it carries through the participation in international transport networks.

Việt Nam now has nine international freight stations including Lào Cai, Yên Viên, Hải Phòng, Đồng Đăng, Giáp Bát, Đà Nẵng, Sóng Thần, Kép and Cao Xá.

The Việt Nam Institute of Transport Strategy and Development predicted that by 2030, the demand for international freight railway transport could reach 8.9 million tonnes per year. However, the current railway infrastructure can handle only 4-5 million tonnes per year, posing significant challenge for the industry in upgrading the system.

Deputy Minister of Transport Nguyễn Danh Huy said that the focus will be on simplifying cargo loading and unloading procedures, reducing logistic costs and time, and increasing the number of international freight stations.

Waterway transport is also expanding its market share with the development of the ports system and logistics network.

According to Việt Nam Maritime Administration, cargo transported by way of water increased by 13.9 per cent to 416 tonnes in the first two months of this year, among which, waterway and seaway transport saw the highest increasing rates of respectively 21 per cent and 18.1 per cent over the same period last year.

However, the transport ministry said that marine transport is under pressure from rising global tensions, climate change impacts and rising input costs.

The Vietnamese Government has approved the national plan for road, airport, seaport, waterway and railway systems through to 2030, aiming to increase transport connectivity, reduce logistic costs and improve the competitiveness of Việt Nam’s goods. The ministry is also studying the investment policy for a North - South high-speed railway system.

Source: VNS