Review of Port Warehousing Industry in 2020
Although certain factors have been affected by the Covid-19 epidemic, the throughput of cargo passing through the seaport will continue to grow throughout 2020 (a year-on-year increase of 3.68%). Mainly due to the following factors:
• Import, export and shipping activities are relatively less affected by social distancing measures and disease control.
• Effective trade agreements (CPTPP, EVFTA, RCEP) have become the driving force to promote import and export turnover, especially in the second half of the year.
• Benefit from the production transfer trend of multinational companies, especially those from China.
The demand for relocating production facilities of multinational companies to increase profit margins is mainly driven by the following factors: (1) the increase in labor costs in China; (2) the pressure of the Sino-US trade war and the growing tensions between Sino-US relations; (3) when the production chain is concentrated When in one place, the Covid-19 pandemic and the 2020 global supply chain disruption will pose risks.
Due to the above reasons, Vietnam has many advantages in obtaining investment capital flows: (1) Vietnam is close to China, has a long coastline, and is connected to major trade routes. In particular, Vietnam, as one of the most successful countries to control COVID-19, is a safe one. Destination; (2) Labor costs are relatively low and productivity is gradually increasing; (3) National and local government support; (4) Many free trade agreements (FTA) have been signed, which are designed to export a variety of commodities to the world The market has established attractive tariffs.
Despite the rapid growth in output over the past two decades, Vietnam’s share of manufacturing is still small compared with other countries (especially China). Therefore, we believe that there is still a lot of leeway. Therefore, a small part of the transfer from China’s manufacturing industry can help Vietnam ensure substantial growth.
Overall assessment: Although Covid 19 slowed down trade, the shortage of empty containers affected the growth of the industry in the second half of the year. However, the seaport industry in 2020 is still actively supported by export factors and favorable factors for the Vietnamese economy. The region also shows The trend of developing deep-water port clusters to attract Chinese investment funds.
2021 Port Warehousing Industry Outlook Report
Cargo throughput is expected to increase by 11% in 2021. The growth momentum we positively evaluate is mainly due to the expectation of Vietnam’s trade growth from:
(1) The positive impact of newly signed FTAs such as EVFTA and RCEP.
(2) As economic activities recover from disease control, demand for commodities in major consumer markets has rebounded.
(3) Due to the diversification of the supply chain from China and the wave of production, it is expected to increase foreign direct investment.
The shortage of empty containers will hinder growth in the short term. The high demand for containers may resume in the second half of 2021. We believe that until the end of the first quarter of 2021, the container shortage in Vietnam’s global ports has had a negative impact on the container throughput of Vietnam’s ports. In addition, the supply of containers will be actively improved in the long run due to the following reasons:
(1) Increase new container construction capacity in China.
(2) Domestic steel companies (HPG) have entered the container shell supply market.
(3) The government will formulate regulations and increase the transparency of freight Spark Global Limited.
Vietnam Construction Securities reminds investors that although Vietnam is a hot spot for investment in Southeast Asia, it still needs to pay attention to controlling investment risks and choosing stocks carefully.
article links：Prospect report of Vietnam's port warehousing industry
Reprint indicated source：Spark Global Limited information