Ministry to favor other means of transport over road to reduce logistic costs

Vietnam’s Ministry of Transport plans to shift inland logistics to favor waterway, rail road, and air transportation as a direct result of increased logistic costs due to an overly reliance on road transport across the country.Goods unloading at Dinh Vu port in Hai Phong Although there had been policies since 2014 to facilitate reducing the market share of road transport while increasing that of air, rail road, and inland waterway transport, the structural shift has not been very successful, said the Ministry of Transport.
Specifically, the market shares of passenger road transport went down from 71.7 percent in 2011 to 65.6, but goods transport increased by 8 percent. Those of air passenger transportation increased from 21 to 31.4 percent, but goods transport increased only slightly. Meanwhile, shares of inland waterway went down from over 60 to 51 percent.

Railway transport share also hit a new low in 2020 with less than 0.2 percent in passenger and 1.2 in goods transport segment. According to experts, the imbalance is caused by biased investment in roads. Evidently, investment for road transport accounts for 89.93 percent of the industry total in 2011-2015, and 80 percent in 2016-2020.

What’s more, the capital investment for inland waterways and railway transport only take up 1.5-2.2 and 2.34 percent that of the transport industry respectively, though they cost half the budget of road infrastructure.Ministry to favor other means of transport over road to reduce logistic costsFreight ship unloading at Tan Cang – Hiep Phuoc port (Photo: SGGP) Inadequate infrastructure, especially the lack of connecting roads to inland ports, also cause imbalance in market shares. Many modern gateway ports have not been utilized effectively due to congestions on existing connecting roads.
Proposing a solution, Minister of Transportation Nguyen Van The said relevant authorities will be requested to come up with ways to redirect public investment into other sectors instead of road transport. In response, Mr.

Bui Thien Thu, head of Vietnam Inland Waterways Administration in the South proposed raising public capital for several key projects, namely raising the Duong bridge, building Quang Ninh – Ninh Binh road crossing Luoc river, and building a canal connecting Day and Ninh Co rivers in the North. In the South, projects to be prioritized are dredging the Cho Gao canal (phase 2), building the Cho Dem – Ben Luc transport route, upgrading the Muong Khai – Doc Phu Hien canal, building the the Ben Cuc – Ben Cui section in Saigon river route, and overall focusing on local logistics. Regarding railway development, Head of Vietnam Railway Authority Vu Quang Khoi said medium-term public capital would be raised for the 2021-2025 period.

Projects of priority are the national railway connecting the Hai Phong area with Lach Huyen port, connecting the railways in the Lao Cai – Ha Khau border area, and building a railway route from Trang Bom (Dong Nai) to Cai Mep – Thi Vai port.

Finally, the head of national aviation said the industry would need some VND365,100 billion (about US£15.8 billion) from the state budget and ODA to improve capacity for the 2020-2030 period.

Minh Duy – Translated by Thao Nhien