This information was announced at the workshop “Vietnam – Indonesia Coal Industry – Ensuring Economic Development and Energy Security” jointly organized by the Indonesian Embassy in Hanoi and Vietnam Chamber of Commerce and Industry.

The presentations at workshop showed that, in the first five months of 2017, Vietnam imported 5.57 million tons of coal, worth US$ 577.218 million, decreased 4.7 percent in volume but increased 58.3 percent in value.

According to Ngo Son Hai, Deputy General Director of EVN, in 2016 EVN started to import coal for Duyen Hai 3 thermal power plant (TPP) – the first plant under EVN using import coal. At present, the Government assigns EVN to build and manage Vinh Tan, Duyen Hai 3 and 4 (expansion) TPP which use import coal. Ensuring steady coal supply for the Duyen Hai 3 TPP is an issue that EVN is particularly concerned about.

Currently, besides EVN, in Vietnam there are TPPs of foreign investors, Petrovietnam, Vinacomin VN, TKV also using import coal.

According to the project “Vietnam Coal Industry Development Planning to 2020 and project till 2030”, by 2020 coal demand for domestic production will reach about 75 million tons. However, domestic coal source can meet only about half of the demand. Therefore, import coal will reach tens million tons by 2020 and up to about 120 million tons by 2030.

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 To the end of the first quarter of 2017, the import coal amount in the country was 3.61 million tons worth $410 million. The import coal mainly came from Russia (1.26 million tons) and Indonesia (1.07 million tons).

According to the Power Planning, Vietnam, will import coal for thermal power plants with an annually increasing amount. Especially, the import coal amount will increase up to tens of million tons per year from 2020.

However, increasing import coal will have a lot of implications for the domestic coal industry. According to recent information from Ministry of Industry and Trade (MOIT), currently, production and business of the coal industry is facing many difficulties as domestic coal has to compete with low price import coal.

According to MOIT, to offset the cost suitable for the coal consumption market, Vinacomin has adjusted increasing coal prices by 3% -10.7% (depending on coal types). However, up to now no customer has signed contract on coal purchase in 2017, because of they do not agree with the new coal prices applied from 24/4/2017 in accordance with Decision No 3005/QD-TKV of Vinacomin.

Soucre: Vietnam Energy

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The above data have show that the growth rate of coal import in 8 months underwent a sudden mutation by both volume and value as 1.2 million tons per month, respectively over US$ 75 million per month.

Russia, Indonesia and China were the largest coal supplies for Vietnam.

Russia, Indonesia and China were the largest coal supplies for Vietnam. The concrete situation of coal import from three counties was as follows: from Russia – 2.8 million tons with an average rate of about US$ 63/ton valued over US$ 179 million; from Indonesia – 1.8 million tons with US$ 44/ton valued US$ 80 million; and from China – 1.4 million tons with US$ 71/ton valued US$ 100 million.

With identifying the domestic coal demand is more and more growing, the Government has approved the project on the Coal Industry Development Plan of Vietnam by 2020 with an outlook up to 2030 in which the coal demand is expected: 56,2 million tons by 2015, 112,3 million tons by 2020, 145,5 million tons by 2025 and 220,3 million tons by 2030.

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This event has helped the company engaged in the import and distribution market of coal. According to Mr. Tran Van Nghia – Chairman of the Board of the Southern Otran – this agreement comes into effect through out the periods of 2 years (2015 – 2016). At the present time, hundred thousands tons of coal have been imported and distributed to the market, which supplies timely to the shortage of coal due to the nature disaster at Quang Ninh.

Leadership representative of Otran Energy and Mercator Group signed the cooperation agreement

According to the Ministry of Industry and Trade, the country’s total coal demand is 41.8 million tons in 2016, which is projected to be 74.9 million tons in 2020 and 143.7 million tons in 2030; while Vietnamese intrinsic ability to exploit coal is 43.8 million tons in 2016, 50.4 million tons in 2020 and 57.5 million tons in 2030. Therefore, the demand for coal importing from other countries in 2020 is expected to be 26.5 million tons and 88.2 million tons in 2030 and will continue to increase in the next few years when the thermoelectric plant goes into operation. In addition, in the field of manufacturing, the demand for coal also steadily increased for many years.

The event marked the participation of Otran in the coal market

Therefore, the company decided to enter the market based on the existing advantages of the deep water seaport system and large warehouses nationwide. Furthermore, Mercator Group – Otran’s partner – owns 4 coal mines in Indonesia with a significant source of coal which is more than 100 million tons and another coal mine in Mozambique with an estimated reserve of about 3 billion tons and many licences for exploring and mining coal, oil & gas in India, Indonesia, Myanmar and Africa. This  group has rich sources of high-quality coal with reasonable prices, which ensures that Otran – Top 50 Large Private Enterprises in Vietnam – can maintain a large and diverse coal supply for the market. To ensure the financial sources, at the signing ceremony with Mercator Group, Otran also signed a financial cooperation agreement with BIDV and Agribank.

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The post Vietnam Logistics Firms Urged to Cut Costs appeared first on Otran Energy.

Vietnam’s logistics market is currently worth US$60 billion. In total, there are around 1,000 logistics firms – 25 of which are foreign firms. Foreign firms of note are Maersk Logistics, APL Logistics, NYK Logistics and MOL Logistics. Most foreign firms can offer third or fourth party logistics (3PL or 4PL) services while Vietnam domestic firms can only handle 2PL services.

Foreign firms in Vietnam currently hold 80 percent of the market share, worth US$48 billion.

Transportation services (road and ocean) are currently the largest subsectors. The ocean shipping services are dominated by joint ventures while road-shipping services are mostly handled by domestic firms.

Cold Chain (storage and cold transportation), however, is considered the sector with the most growth potential for foreign investors. The continued entry of major retailers and the increasing export of farming and seafood products are expected to create multiple opportunities for Cold Chain specialists. Additionally, due to Vietnam’s traditional “eating fresh” society, the “frozen food” retail sector is currently fragmented and the Cold Chain industry is under-invested. In order to remedy this situation, the government has introduced various financial incentives in order to attract foreign investment into this segment. Japanese firms make up the largest percentage of foreign specialists at this time.

In reaction to the perceived growth potential of Vietnam’s logistics market, foreign firms are investing heavily throughout the country. For example, in 2013, DHL Supply Chain invested US$13 million in an expansion project. It is expected to build 141,000m² in storage capacity and have roughly 100 shipping vehicles and 2,200 workers by the end of 2015. According to Oscar De Bok, General Manager of DHL Supply Chain in Southeast Asia, the company is preparing for the fast growth of the retail industry, consumer goods, tech products and automotive industry in Vietnam. Since its entry in 2001, DHL Supply Chain Vietnam has had an annual growth of 45 percent, compared to its annual global growth of 25 percent.

Maersk Line, ocean-shipping subsidiary of A.P. Moller-Maersk, has also constructed four new storage facilities and it is planning on an expansion project in 2015. From 2005 to 2010, Maersk Line’s operations grew by 200 percent.

In January 2014, in accordance with World Trade Organization (WTO) service sector commitments, Vietnam began allowing wholly foreign-invested enterprises to enter the logistics market in almost every sector. However, the container handling services and road transport services sectors still require a joint venture to be formed with Vietnamese partners.

From Vietnam Briefing

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Key Findings:

•    While Vietnam has attained a strong track record of economic growth over the past 20 years, the drivers that fueled this growth are rapidly depleting, making it critical to develop new drivers of growth going forward.

•    More competitive transport and trade logistics can become a new driver of sustained growth through their positive impact on productivity and their direct influence on business competitiveness.

•    Logistics operations in Vietnam are costly relative to key regional peers like China, Malaysia, and Thailand, primarily because of the prevalence of unpredictability in supply chains.

•    Unpredictability in supply chains increases logistics costs by making it necessary for businesses to carry more inventory than they would otherwise need to manage their everyday operations. Vietnam’s key root causes of supply chain unpredictability are:

–    Cumbersome and inconsistently-applied government regulations;
–    Lack of automation in key trade-related processes such as trade clearance;
–    Fragmented modal planning in transportation;
–    A belief among shippers and logistics service providers that facilitation payments are necessary to avoid delays in supply chains;
–    Low barriers to entry in trucking; and
–    Major supply-demand imbalances in infrastructure provision.
•    It is estimated that Vietnam’s shippers spend approximately US$100 million annually in extra inventory carrying costs due to import-export clearance delays, an amount that is projected to reach US$180 million by 2020.

Key recommendations:

•    Minimize paper-based processes in the customs and technical clearance of imports and exports.

•    Ensure transparent and consistently interpreted, applied, and enforced government regulations and operations related to international trade.

•    Define and manage “multimodal logistics corridors” where containerized flows on trucks and barges can move on adequate infrastructure and with minimal regulatory delays.

•    Improve hinterland connections to deep-water ports at the Northern and Southern gateways; and develop and execute a plan to match supply and demand in container terminal handling at these gateways.

•    Facilitate the entrance of international players to the freight forwarding and third-party logistics service-provider market and encourage collaboration between foreign and domestic players.

•    Promote a more sustainable supply-demand balance in the trucking industry.

From World Bank

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