Transportation Infrastructure Feasibility Study

By Herb Cochran

The U.S. Trade and Development Agency (USTDA) provided grant support to Vietnam National Shipping Lines (Vinalines) to conduct the “Vietnam Transportation Logistics Feasibility Study”. The objectives of the study are to profile the existing processes, information systems and infrastructure for handling import and export containerized cargo, and to make recommendations for future improvements to reduce the costs and improve the security of containerized trade. Vinalines contracted with SSA Marine to conduct the study. A U.S. company, SSA Marine is a leading independent marine terminal operator with terminal operations in North America, Panama, Mexico, Chile, Costa Rica and New Zealand. In Vietnam, SSA Marine is participating in development of new container terminals at Cai Mep to serve the HCMC region and at Cai Lan in Northern Vietnam.

As stated in USTDA’s terms of reference for the study, the Host Country has seen an increase in sea-going cargo based trade of more than 20 percent annually; HCMC accounts for 60 percent of the Host Country’s maritime cargo movement. To keep pace, the Grantee seeks to identify an appropriate logistics system to reduce trade costs and improve trade security for their operations. The purpose of the study is to recommend appropriate telecommunications, information technology (IT) and software systems needed to improve cargo movement in and around ports and container terminals in the growing Ho Chi Minh City (HCMC). The study provides an assessment of the current state of container logistics for international cargo around HCMC, projects the anticipated trade growth for the next five, ten and fifteen years, identifies area for improvement and streamlining, defines improvements for the next five, ten and fifteen years, and identifies areas for U.S. involvement in the implementation of the project.

The Report is structured by task:

• Task 1: Review of Host Country’s Container and Trade Trends

• Task 2: Review of Current and Future Infrastructure Plans

• Task 3: Survey of Companies Involved in Container Movement and Trade

• Task 4: Export and Import Cargo Process Maps

• Task 5: Technology Requirements and Solutions

• Task 6: Interim Presentation

• Task 7: Development of Implementation Plan and Cost Estimates

• Task 8: Development Impact Assessment

Principal Recommendation

The evaluation of the HCMC region logistics system for handling containers, along with a review of the region’s container trade, identified several technology gaps that require addressing in order to improve the efficiency and security of the region’s logistics system. The technology gaps center on the absence of IT systems to track and monitor the movement of containers between the container terminals and the various inland points, such as industrial zones, storage depots, and inland container (clearance) depots (ICD).

The study team identified a variety of IT solutions to improve the logistics system and the central recommendation is the establishment of a Port Community System (PCS). The PCS provides information services to the community outside of the port or individual container terminals in order to improve the overall efficiency of the logistics community as well as to offer improved security throughout the entire logistics chain. In addition, the PCS addresses many of the IT challenges encountered today, complements investments in physical infrastructure, and supports medium to long term trade growth. The PCS has several components that would be phased in over a five-year time horizon; elements include container enquiry functions, gate scheduling, trucker validation, online payment of fees, functions for ICDs, and barge operation features.

For PCS to succeed, there must be a relatively neutral Champion (or sponsor) who would be able to encourage the logistics community (terminals, trucking companies, ICDs, etc.) to participate. In the case of the HCMC region, it is recommended that an influential state-related body be identified as the Champion. The Champion should be well-respected with the appropriate commercial and government relations to pursue the PCS strategy.

Implementation and operation of PCS would be undertaken by a joint venture (JV) between a local Vietnamese company and an established PCS technology provider. The study team recommends the joint venture use an Application Service Provider (ASP) business model to establish and operate the PCS. This business model is a competitive cost solution by outsourcing the IT operation to a proven PCS solution provider with immediate access to PCS technology that can be modified to the local HCMC region environment.

The total 5-year cost to implement and operate PCS is projected to be US$1.29 million. This cost includes annual IT expenses (hardware and software system lease, PCS software licensing, and support services) and general and administrative (G&A) expenses. The cost may be funded from a variety of sources including internal resources of the study sponsor, a joint venture partner, multilateral and foreign government agencies, and on-going transaction fees.

The PCS supports the more efficient and secure movement of containers between the marine terminals and inland points by providing a neutral resource for the exchange of information on containers. The individual container terminal operating companies are responsible for selecting and managing IT technologies within their respective container terminals.

The principal recommendation is described in Sections 5 and 7 of the report. The remainder of the Executive Summary summarizes key findings on the structure of the HCMC logistics system and the recommendations proposed by the study team.

Read the complete report:

The post Transportation Infrastructure Feasibility Study appeared first on AmCham Vietnam.

Via: AmCham Vietnam