and coastal shipping - viet nam supply...
TRANSCRIPT
Opportunities, Limitations, and the Case for Investment
Vietnam’s Inland Waterways
and Coastal Shipping
Luis C. Blancas Transport & Logistics Specialist, The World Bank
Vietnam faces two key “twin” challenges: spur growth and protect
the environment
5.6%
7.4%
1990-2007 2008-2018
Vietnam: Historical and Projected
Average Annual Growth in Real GDP
Source: IMF; McElwee et al. (2010), The Social Dimensions of Adaptation to Climate Change in Vietnam, World Bank Discussion Papers Series, No.12, 2010; and Blancas and
El-Hifnawi (2013), Facilitating Trade Through Competitive, Low Carbon Transport: The Case for Vietnam’s Inland and Coastal Waterways, Washington DC: World Bank.
Top 5 Vietnam’s position in the list of
countries in the world likely to be
most affected by sea level rise
5%
Share of Vietnam’s land area that
would be permanently inundated
under a 1-meter sea level rise by the
end of the century (MONRE
projections through 2100 between
65 cm and 1m, depending on
severity of emissions)
25% Share of Vietnam’s population living
in coastal areas
Growth has slowed… …while climate change risks have intensified
Investments in the country’s waterways can
tackle both challenges simultaneously
It is difficult to overstate the importance of inland waterway transport
(IWT) for the everyday functioning of the Vietnamese economy
Source: Blancas and El-Hifnawi (2013), Facilitating Trade Through Competitive, Low Carbon Transport: The Case for Vietnam’s Inland and Coastal Waterways, Washington DC: World Bank;
tonnage share and volume data derived from VITRANSS-2.
Vast waterway resources… …that impact market and economic growth
15,000+ kilometers of navigational
inland waterways under management
3,000+ kilometers of coastline
adjacent to major east-west trades
2 major river deltas
46% 53% 48% captured by IWT alone
210 million tons of freight transported via IWT and coastal shipping per year
IWT tonnage share for key commodities:
73% 79% 69% 54% 30%
Coal Construction
materials Fertilizer Cement Rice
Waterborne Transport
Road Transport
1% Other modes
Inland waterway transport is both more economical and cleaner than
road transport
Source: Blancas and El-Hifnawi (2013), Facilitating Trade Through Competitive, Low Carbon Transport: The Case for Vietnam’s Inland and Coastal Waterways, Washington DC: World Bank.
Vietnam: Estimated transport costs
borne by carriers US$ per ton-km
0.02
0.18
15-ton truck 700-ton barge
Estimated CO2 emissions by mode Weighted average grams of CO2 per ton-km
40
71
110
Vietnam’s
current truck
fleet
Vietnam’s
current barge
fleet
Holland’s
barge fleet
Yet Vietnam’s inland waterway sector remains largely underfunded…
Source: Blancas and El-Hifnawi (2013), Facilitating Trade Through Competitive, Low Carbon Transport: The Case for Vietnam’s Inland and Coastal Waterways, Washington DC: World Bank.
Insufficient capital expenditures… …coupled with insufficient maintenance
expenditures
Weighted Average Barge Size Deadweight tons
100
2,400
Netherlands,
Belgium and
Germany
Vietnam
50-60%
Estimated funding level of
maintenance need for
Vietnam’s core IWT network
…despite the presence of significant economies of ship size in IWT
Source: Paul Amos, international consultant.
0
20
40
60
80
100
120
140
160
180
500 750 1000 1250 1500 1750 2000 2250 2500 2750 3000 3250 3500
DWT
Estimated unit cost per ton-km index for self-propelled dry cargo barge, (1000 DWT barge = 100)
There is tangible evidence that carriers and end-users respond to
economies of ship size, both internationally…
1\ Germany, Belgium and the Netherlands.
Source: Blancas and El-Hifnawi (2013), Facilitating Trade Through Competitive, Low Carbon Transport: The Case for Vietnam’s Inland and Coastal Waterways, Washington DC: World Bank.
Average DWT in Western European\1 IWT Barge Fleet, 1951-2008
…and right here in Vietnam
Source: Blancas and El-Hifnawi (2013), Facilitating Trade Through Competitive, Low Carbon Transport: The Case for Vietnam’s Inland and Coastal Waterways, Washington DC: World Bank; data
obtained from Vietnam Register.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000 2005 20100%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000 2005 2010
> 1,000 tons and >135 HP
700 to 1,000 tons and >135 HP
500 to 700 tons and >135 HP
300 to 500 tons and >135 HP
200 to 300 tons and >135 HP
50 to 200 tons and 50 to 135 HP
15 to 50 tons and 15 to 50 HP
5 to 15 tons and 5 to 15 HP
Vietnam: Breakdown of the National Barge Fleet by Barge Size
Vessel count share Available DWT capacity share
Barge size:
Over the next 20 years, Vietnam’s main inland waterway corridors are
expected to grow… but to also lose tonnage share to the roads
Source: Blancas and El-Hifnawi (2013), Facilitating Trade Through Competitive, Low Carbon Transport: The Case for Vietnam’s Inland and Coastal Waterways, Washington DC: World Bank.
Main corridors of the Red River Delta
Source: Blancas and El-Hifnawi (2013), Facilitating Trade Through Competitive, Low Carbon Transport: The Case for Vietnam’s Inland and Coastal Waterways, Washington DC: World Bank.
Main corridors of the Mekong River Delta
Over the next 20 years, Vietnam’s main inland waterway corridors are
expected to grow… but to also lose tonnage share to the roads (cont.)
Source: Blancas and El-Hifnawi (2013), Facilitating Trade Through Competitive, Low Carbon Transport: The Case for Vietnam’s Inland and Coastal Waterways, Washington DC: World Bank; data
derived from VITRANSS-2.
Vietnam: Projected Long-term Tonnage Volume
Growth by Mode, 2008-2030 Average annual growth rate
3.6%
5.9%
3.3%
Roads Coastal shipping
IWT
Over the next 20 years, Vietnam’s main inland waterway corridors are
expected to grow… but to also lose tonnage share to the roads (cont.)
Source: Blancas and El-Hifnawi (2013), Facilitating Trade Through Competitive, Low Carbon Transport: The Case for Vietnam’s Inland and Coastal Waterways, Washington DC: World Bank.
We conducted a two-step quantitative analysis of the economic
desirability of investments in IWT and Coastal Shipping
Needs assessment
and strategy Modal Split Model
Cost-Benefit
Analysis
Analysis
Output
Interventions and
investment costs
Impact on:
Modal shift
Transport costs
Emissions levels
Economic rationale
NPV
eIRR
B/C ratio
2 1
On a preliminary basis, we find economically viable investments in the
IWT sector
Source: Blancas and El-Hifnawi (2013), Facilitating Trade Through Competitive, Low Carbon Transport: The Case for Vietnam’s Inland and Coastal Waterways, Washington DC: World Bank.
Corridor 1 of the Mekong River Delta is the most heavily used IWT
corridor in the country—and the most congested
Source: Blancas and El-Hifnawi (2013), Facilitating Trade Through Competitive, Low Carbon Transport: The Case for Vietnam’s Inland and Coastal Waterways, Washington DC: World Bank.
Cho Gao Canal
Emission reductions are projected to be significant contributors to the
economic viability of waterborne transport investments, despite modest
modal share gains
Source: Blancas and El-Hifnawi (2013), Facilitating Trade Through Competitive, Low Carbon Transport: The Case for Vietnam’s Inland and Coastal Waterways, Washington DC: World Bank.
Key takeaways from modal share and benefit-cost analysis
Source: Blancas and El-Hifnawi (2013), Facilitating Trade Through Competitive, Low Carbon Transport: The Case for Vietnam’s Inland and Coastal Waterways, Washington DC: World Bank.
Investments in the waterways can deliver attractive economic returns, but these
are heavily dependent on the expected intensity of future traffic.
Among all main inland waterway corridors, the upgrading of Corridor 1 of the
Mekong Delta—including the 29-kilometer Cho Gao Canal, the most pressing
bottleneck in the Mekong Delta network for flows to and from HCMC—yields the
most attractive economic returns to infrastructure improvements and should
be seen as a development priority.
Further upgrades to Corridor 1 of the Red River Delta appear to also be
economically viable.
Left to market forces, the potential for modal shift from roads to waterways in
Vietnam is limited (to within 1 to 3 percentage points over the long term).
This being the case, the majority of benefits associated with waterway infrastructure
upgrading stem from within-mode (i.e., IWT-specific) transport cost efficiency improvements.
Better maintenance of the waterways is expected to pay for itself.
Thank you!