Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Vietnam Logistics Market 2019 Preview

538 views

Published on

Vietnam Logistics Market 2019 Preview
Please download pdf here: http://bit.ly/Vietnam_Logistics_Market_2019_Preview

Published in: Business
  • Be the first to comment

Vietnam Logistics Market 2019 Preview

  1. 1. 1Financial Information | Business Information | Market Research INDUSTRY PREVIEW Vietnam logistics market 2019 Prepared by FiinGroup Aug 2019
  2. 2. 2Financial Information | Business Information | Market Research Content Content Page 1 Logistics market in Vietnam 2 - 4 2 Port operation in Vietnam 5 – 12 3 Expressway and Railway in Vietnam 13 – 18
  3. 3. 3Financial Information | Business Information | Market Research Logistics Sector in Vietnam can be segmented into three main categories namely Transportation, Forwarding and Warehousing Logistics market in Vietnam Source: FiinGroup Logistics International transportation Forwarding Domestic transportation Cold storage Cold transportation Four main types are roads, railways, sea/rivers and air. Local companies dominate this segment, e.g. Vietnam Railways Corp, Vinalines, Vietnam Airlines. In terms of infrastructure, the quality of domestic roads & railways network are poor and inefficient, while shipping lines and airlines are considered time-consuming and costly, respectively. Global logistics companies dominate this segment, including Maersk Logistics, APL Logistics, NYK Logistics, and MOL Logistics. Domestic companies only provide sea and air services. However, they provide very limited international transportation service with top local players including Vinalines and Vietnam Airlines. Warehousing Transportation Other value-added services ICD & CFS services Customs clearance Cold chain Bonded warehouse Packing, Inspection, Fumigation, etc. Port operation Local companies are very active in this segment. Key players are Sotrans, Vinatrans, Vinalink, Tan Cang Logistics, and Vinafreight. Cold chain is one of the most promising logistics segment for growing in Vietnam thanks to soaring demands, creating opportunities for both local and international companies to tap in. Port operation in Vietnam is dominated by SOEs and private players such as Vinalines, Gemadept, Saigon New Port. Figure 1: Logistics Sector Structure in Vietnam
  4. 4. 4Financial Information | Business Information | Market Research Road remains the key transportation line in Vietnam, posting a 2008-2018f CAGR of 10.6% with transported freight volume of 1.25bn tons by 2018 Source: FiinGroup, GSO • Despite its dominating position in the total transported freight volume, road transportation did not fully reach its potential and serve the growing demand of cargo transportation due to the underdeveloped road network. Inconsistencies across the transport network in terms of extent and quality are one of the most problematic factors for firms doing business in Vietnam. • Upgrading Vietnam's road network is now a major priority for the government, as road congestion is an increasing problem, particularly in the South of the country as it delays the time for transportation and increases the associated costs. Figure 2: Transported Freight Volume by Transportation Line, 1H2018 Logistics market in Vietnam 77.18% 17.67% 4.77% 0.36% 0.02% Road IWT Ocean Railway Air 456 514 587 654 718 764 822 874 991 1,118 1,254 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018f [Transported Freight Volume by Road, mn Tons ] 2008-2018f CAGR = 10.6% 2018E
  5. 5. 5Financial Information | Business Information | Market Research Content Content Page 1 Logistics market in Vietnam 2 - 4 2 Port operation in Vietnam 5 – 12 3 Expressway and Railway in Vietnam 13 – 18
  6. 6. 6Financial Information | Business Information | Market Research Demand for port operation in Vietnam has been on the rise with increasing cargo throughput via Vietnam seaports Source: FiinGroup • Vietnam has a total of 264 wharfs with total designed capacity of 543.7 mn tons per year. Cargo throughput via seaport started to boom in the last three years thanks to continuous increment in import-export activities, government persistence effort in policy and infrastructure improvement. In 10M2018, cargo throughput via Vietnam’s port system was estimated at 430 mn tons, up 19% from the same period in 2017. Of which, containerized cargo reached 14.78 mn TEUs, posting an increase by 26% compared to same period last year. • The average sector’s utilization rate reached over 95%, however, due to fierce competition and long coastal line, some ports with prime location such as Cai Mep (connection with industry parks/ hubs, low fees) operates at over 100% utilization rate while some other ports do with under 50% utilization rate, resulting in delay and higher logistics cost for Vietnam. Figure 3: Cargo Throughput via Vietnam Seaport, mn Tons 232 140 56 255 161 43 281 175 80 323 218 80 - 50 100 150 200 250 300 350 International trade Domestic Transit mntons 2015 2016 2017 2018E 428 460 536 621 703 797 904 1,025 - 200 400 600 800 1,000 1,200 2015 2016 2017 2018E 2019F 2020F 2021F 2022F mntons ⇧12% ⇧16% ⇧12% 2015-2018 CAGR = 13.2% Port operation in Vietnam
  7. 7. 7Financial Information | Business Information | Market Research Thanks to high demand for port services from both foreign and domestic customers, market size of port operation industry is estimated at US$2.7bn in 2018 Source: FiinGroup Figure 4: Market size of port operation in Vietnam, 2015 – 2022F Port operation in Vietnam Breakdown of port operation’s revenue (US$ mn) by main services 1,705 474 61 108 - 500 1,000 1,500 2,000 2,500 2017 US$mn Other services Towing service Cargo storage Loading and unloading service 1,878 2,037 2,348 2,702 3,055 3,458 3,915 4,434 - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 2015 2016 2017 2018E 2019F 2020F 2021F 2022F US$mn 73% 5% 3% 20% Proportion over market size 2018
  8. 8. 8Financial Information | Business Information | Market Research International trade is the key driver for growth of port operation, accounting for the majority of cargo throughput via ports Source: FiinGroup Figure 5: Breakdown cargo throughput of each product type by sources, 2015 - 2018 Port operation in Vietnam 39% 40% 39% 34% 40% 40% 39% 34% 21% 21% 22% 33% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2015 2016 2017 2018Export Import Domestic CONTAINER BULK 31% 25% 28% 28% 25% 32% 29% 28% 45% 43% 42% 44% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2015 2016 2017 2018 Export Import Domestic LIQUID 15% 15% 11% 7% 38% 28% 31% 30% 48% 57% 58% 64% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2015 2016 2017 2018 Export Import Domestic InternationalInternationalDomestics
  9. 9. 9Financial Information | Business Information | Market Research Most of cargos in the North is transported by sea via port system in Hai Phong province Source: FiinGroup Figure 6: Ports in the North, 2018 Figure 7: Number of port by province in the North, 2018 Source: FiinGroup Port operation in Vietnam Figure 8: Top 10 provinces with the highest im-export value, 10M2018 0 5 10 15 20 25 30 35 40 45 50 Hai Phong Quang Ninh Nam Dinh Thai Binh Numberofport - 10,000 20,000 30,000 40,000 50,000 60,000 Bac Ninh Hanoi Thai Nguyen Hai Phong Hai Duong Bac Giang Vinh Phuc Hung Yen Quang Ninh Ha Nam US$mn Import Export Source: FiinGroup Bac NinhHa Noi Thai Nguyen Quang Ninh Hai Duong Bac GiangVinh Phuc Hung Yen Ha Nam Hai Phong
  10. 10. 10Financial Information | Business Information | Market Research With more than 40 ports for each province, Ho Chi Minh and Ba Ria – Vung Tau are key hubs in the South, supporting the transportation of majority products in the South Source: FiinGroup Figure 9: Ports in the South, 2018 Figure 10: Number of port by province in the South, 2018 Source: FiinGroup Port operation in Vietnam Figure 11: Top 10 provinces with the highest im-export value, 10M2018 Source: FiinGroup 0 5 10 15 20 25 30 35 40 45 50 HCMC Ba Ria - Vung Tau Can Tho Dong Nai Kien Giang Dong Thap Binh Thuan Tien Giang Long An Binh Duong Tra Vinh An Giang Vinh Long Ca Mau Numberofport - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 HCMC Binh Duong Dong Nai Ba Ria - Vung Tau Long An Tay Ninh Tien Giang Binh Phuoc Can Tho Dong Thap US$mn Import Export Truong Sa Binh Duong Dong Nai Long An Tay Ninh Tiên Giang Binh Phuoc Can Tho Dong Thap HCMC Ba Ria - Vung Tau
  11. 11. 11Financial Information | Business Information | Market Research Khanh Hoa and Da Nang are port centers in Central of Vietnam Source: FiinGroup Figure 12: Ports in the Central, 2018 Port operation in Vietnam 13 12 7 6 6 6 5 4 3 2 2 - 2 4 6 8 10 12 14 Khanh Hoa Da Nang Thanh Hoa Nghe An Ha Tinh Quang Ngai Quang Binh Binh Dinh Quang Nam Thua Thien Hue Ninh Thuan Numberofport - 1,000 2,000 3,000 4,000 5,000 6,000 Thanh Hoa Ha Tinh Da Nang Quang Nam Khanh Hoa Dak Lak Quang Ngai Thua Thien Hue Nghe An Binh Dinh US$mn Import Export Hoang SaHoang Sa Thanh Hoa Ha Tinh Quang Nam Khanh Hoa Dak Lak Quang Ngai Thua Thien Hue Nghệ An Binh Dinh Da Nang Thanh Hoa Ha Tinh Quang Nam Khanh Hoa Dak Lak Quang Ngai Thua Thien Hue Nghệ An Binh Dinh Da Nang Figure 13: Number of port by province in Central, 2018 Source: FiinGroup Source: FiinGroup Figure 14: Top 10 provinces with the highest im-export value, 10M2018
  12. 12. 12Financial Information | Business Information | Market Research Financial indicators of key port operators in Vietnam Source: FiinGroup Figure 15: Key financial ratios – Sector average Port operation in Vietnam Capital Structure & Liquidity Unit 2014 2015 2016 2017 D/E Time 4.00 0.94 1.06 1.12 Current ratio Time 0.73 0.42 0.49 0.50 Profitability Unit 2014 2015 2016 2017 Gross margin % 16.67 21.10 19.36 15.17 Operating margin % 2.34 9.77 5.43 6.89 Net profit margin % 6.53 10.18 14.41 9.06 ROA % 2.79 5.20 7.39 4.89 ROE % 15.23 11.73 16.11 11.03 Cost Analysis Unit 2014 2015 2016 2017 %COGS % 80.50 78.15 80.61 84.90 % SG&A % 7.51 7.63 9.00 6.45 % Financial expense % 9.18 6.42 5.71 4.65 Efficiency Unit 2014 2015 2016 2017 Account receivables turnover Time 15.28 14.37 11.90 7.10 Account payables turnover Time 8.90 17.18 17.77 6.72
  13. 13. 13Financial Information | Business Information | Market Research Content Content Page 1 Logistics market in Vietnam 2 - 4 2 Port operation in Vietnam 5 – 12 3 Expressway and Railway in Vietnam 13 – 18
  14. 14. 14Financial Information | Business Information | Market Research Since Vietnam’s transport quality is still lower than other peers… Source: FiinGroup, Fitch Solutions Note: Scores out of 7 (higher score = higher quality). Data is not available for Myanmar • Vietnam’s transport infrastructure is expanding rapidly, however the development in this sector is still far below the needs of the country’s economic and social growth. Rapid growth in urban population and freight transport are the primary drivers of Vietnam's transport infrastructure needs. Rising demand for intercity passenger and freight transport has prompted the government to build and upgrade the expressway and railways running through the country. Figure 16: Vietnam & Asean – Competitiveness of transport infrastructure, 2018 Expressway and Railway in Vietnam 0 1 2 3 4 5 Quality of Overall infratructure Quality of Roads Quality of railroad infrastructure Quality of port infrastructure Quality of air transport infrastructure Vietnam ASEAN Average Quality of Vietnamese transport infrastructure is lower than Asean average at all segments
  15. 15. 15Financial Information | Business Information | Market Research …the Country plans to invest in new expressways and railways to address its logistics shortcomings Source: FiinGroup Figure 17: BOT, BT projects (national roads and railways), 2019 Figure 18: Transport infrastructure investment by category Source: FiinGroup, Fitch Solutions Expressway and Railway in Vietnam 51 11 5 1 -5 5 15 25 35 45 55 Completed Bidding In construction NA Numberofprojects Ongoing and upcoming projects will be key growth drivers for Vietnam’s transport infrastructure sector in the time to come Expressway Railway 11 0 4 1 Indicator 2018 2019f 2020f 2021f 2022f 2023f 2024f Total transport infrastructure 7.7 6.2 6.1 5.8 5.7 5.6 5.6 Roads and bridges 9.1 7.2 6.9 6.9 6.7 6.5 6.5 Railways 6.5 4.8 5 5.2 5 5.2 5.3 Airport 3.4 7 7.6 4 3.9 3.8 3.8 Ports, harbors and waterways 5.8 3.9 3.3 3.1 2.9 2.7 2.5
  16. 16. 16Financial Information | Business Information | Market Research 800 513 654 0 600 1,200 1,800 2,400 3,000 2019 Upcoming Under construction Completed 2,703 2,699 1,009 14.7 25.8 19.8 0.0 6.0 12.0 18.0 24.0 30.0 0 600 1,200 1,800 2,400 3,000 2016-2020 2021-2030 2031 onward New expressway length (km) New investment needs - RHS (US$bn) Vietnam needs US$60.3bn to finance for 6,400km expressway by 2030 Source: FiinGroup, Decision No.326/QĐ-TTg dated March 1, 2016, approving the master plan on development of Vietnam’s expressway network through 2020, with orientations toward 2030 Figure 19: Masterplan of new expressway development in Vietnam by the Government, 2020 - 2030F Expressway and Railway in Vietnam • In terms of investment needs, the expressway network is expected to cost an aggregate amount of US$60bn, spanning over the course of 10 years. Particularly, the needed capital for the construction of the expressway will be financed from the following sources: • Government’s budget in form of government loan, government-guaranteed loan and project loan. The state’s budget will be prioritized for projects which are financially unattractive but effectively contribute to the socio-economic development. • Private sectors, including foreign investors in the various forms of public-private partnership (PPP) such as BOT, BT, BTO. Expressway PLANNED ACTUAL | New expressway length (km)
  17. 17. 17Financial Information | Business Information | Market Research Vietnam needs US$5.5bn to develop 654km North-South expressway Phase 1 Source: FiinGroup, Decision No.326/QĐ-TTg dated March 1, 2016, approving the master plan on development of Vietnam’s expressway network through 2020, with orientations toward 2030 Figure 20: Accumulated new expressway length (km), 2016-2020 Expressway and Railway in Vietnam • Of the entire expressway network, the government prioritized on the remaining 2,109km of the North-South expressway, which will be completed over three phases by 2030. Phase 1 of North-South expressway project, which included 11 sections ranging over 654km, is set to commence in the Q4 of 2019. Total investment for phase 1 of the project is estimated at US$5.4bn, including US$2.4bn from government funding and the remaining US$3.0bn raised from investors through PPP. • Three projects are expected to be entirely funded by government budget at US$674mn and will begin construction by Q42019. • Eight projects will be financed from both state budget and private funding, including foreign investors. These projects are expected to start by 2020, as soon as the bidding process is completed. No. Route Funding Estimated Cost (US$mn) Length (km) Kickoff timeline 1 Cao Bo - Mai Son State budget 74 15 4Q2019 2 Cam Lo – La Son State budget 364 102 4Q2019 3 My Thuan 2 Bridge State budget 236 7 4Q2019 4 Mai Son - National Highway 4 PPP 678 63 2020 5 National Highway 4 - Nghi Son PPP 358 43 2020 6 Nghi Son - Dien Chau PPP 399 50 2020 7 Dien Chau - Bai Vot PPP 627 50 2020 8 Nha Trang - Cam Lam PPP 237 29 2020 9 Cam Lam - Vinh Hao PPP 693 91 2020 10 Vinh Hao - Phan Thiet PPP 906 106 2020 11 Phan Thiet - Dau Giay PPP 903 98 2020 TOTAL 5,475 654 List of new expressway routes under North – South expressway project, 2019 - 2020 Expressway 800 800 513 654 0 500 1,000 1,500 2,000 2,500 2018 2019 Existing Under construction Upcoming
  18. 18. 18Financial Information | Business Information | Market Research Source: FiinGroup, Decision 214/QD- TTg approving for plan on development strategy for Vietnam’s railway transport up to 2020 with a vision toward 2050 • According to Decision 214/QD- TTg, the Government plans to increase the number of passengers travelling by railway to approx. 2% total passenger movements and approx. 5% urban passenger movements in Hanoi and Ho Chi Minh City in 2020 and reach 8% and 30% in 2050, respectively. To achieve the target, the Government plans to build an electrified 1,435 mm dual-gauge high-speed railroad on the North-South axis under construction as PPP schemes. • Besides, the Government also plans to develop urban railway in Hanoi and Ho Chi Minh City. Particularly, Hanoi is currently building two metro lines – Lines 2 and 3 and another 4 planned in the longer term having total length of 410.8 km and Ho Chi Minh with currently building two metro lines and other 5 lines in planning stages totaling 227 km. Figure 21: Expected railway share by passenger transport market in nation and urban (%) Figure 22: Vietnam’s railway infrastructure investment needs, (US$bn), 2001-2040F Source: FiinGroup, G20 Global Infrastructure Outlook 2017 Expressway and Railway in Vietnam 2.0% 4.0% 8.0% 5.0% 20.0% 30.0% 0% 7% 14% 21% 28% 35% 2020F 2030F 2050F Nationwide Urban 0.2 0.5 21.0 0 2001-2010 2011-2015 2016-2040 Despite many difficulties and challenges, the opportunities for railway development are open as Vietnamese Government plans to build a standard-gauge high-speed railway Railway
  19. 19. ‹#›Financial Information | Business Information | Market Research Services Contact us Dong Le, CFA Director, Market Research & Consulting Services M: +84 (024) 3562 6962 (ext. 110) T: +84 (0) 912 057 529 E: dong.le@fiingroup.vn W: www.fiingroup.vn Hai Khieu Manager, Market Research & Consulting Services T: +84 (024) 3562 6962 (ext. 120) M: +84 (0) 966 510 388 E: hai.khieu@fiingroup.vn W: www.fiingroup.vn Head Office 5th Floor, Anh Minh Building 36 Hoang Cau Street Hanoi, Vietnam + 84 (24) 3562 6962 Ho Chi Minh City Branch 3rd Floor, Profomilk Plaza Bldg 51-53 Vo Van Tan, District 3 Ho Chi Minh City, Vietnam + 84 (28) 3933 3586

×