DP World will open a container terminal outside of Ho Chi Minh City in Vietnam later this year, its first to come on line since the economic downturn stalled global growth.
DP World to open terminal in Vietnam
DP World will open a container terminal outside of Ho Chi Minh City in Vietnam later this year, its first to come on line since the economic downturn stalled global growth. After nearly three years of planning, and 12 months after it was originally scheduled to open, Saigon Premier Container Terminal (SPCT) will begin operations on Oct 1.
It will be DP World's first facility in Vietnam, and will be part of the company's long-term plans to expand into Asia's emerging manufacturing centres. The terminal will be able to handle 1.5 million standard containers (TEUs), making it a relatively small terminal compared with DP World's flagship port in Jebel Ali, which can accommodate 14 million containers a year. The global downturn stalled trade and the shipping industry, prompting DP World earlier this year to say it was reviewing and delaying investments at all of its new developments, including the multibillion-dollar London Gateway project.
The downturn has hit Asia's export-orientated economies, but Robin Byde, a ports analyst with HSBC in London, said DP World was looking beyond the region's slowdown. "Their emerging market strategy is medium to long term, and therefore despite the downturn this is quite a good time to invest in new market opportunities," he said. DP World's Asian operations include seven terminals in China - three of them in Hong Kong - and others in South Korea, Indonesia, the Philippines and Thailand.
Vietnam has emerged as South East Asia's second-fastest growing economy, with an average annual increase of 7.1 per cent since 2000, DP World said. However, concerns have surfaced that the Vietnamese economy is overheated after seeing huge foreign investment in 2006 and 2007. Growth in the first half of the year was 6.5 per cent, Vietnam's slowest pace in seven years, due to declines in the stock and property markets.
Other new projects under development by DP World, which operates 49 terminals across more than 30 countries, include ports in Qingdao, China; Fos, France; Kulpi and Vallarpadam in India; and Callao, Peru. The Ho Chi Minh City terminal has been built in an industrial park on the Soa Rap River. Its strategic location will allow it to serve exports out of Ho Chi Minh City and also the surrounding industrial zone, said DP World, which acquired the project when it bought P&O of the UK in 2006.
DP World owns 80 per cent of the terminal joint venture, with the rest controlled by a state-owned Vietnamese firm, Tan Thuan Industrial Promotion Company (IPC). Ho Chi Minh City is served by a number of port facilities along the Dong Nai and Saigon rivers. However, DP world said several terminals on the Saigon River had been designated by authorities to be progressively wound down over the next few years.
SPCT will gradually take over the cargo that moves through these ports, while attracting new business from the large industrial zones outside the city, said Peter Wong, the senior vice president and managing director of DP World in Asia. Australia is another key part of DP World's Asia-Pacific strategy, with new leases recently signed at Port Botany in Sydney, as well as Brisbane and Adelaide. Earlier this month, the Federal Court of Australia fined DP World and a stevedoring firm A$1.9 million (Dh5.6m) each for anti-competitive measures for automotive terminal services at ports in Brisbane, Sydney and Melbourne between 2001 and 2002, when the ports were owned by P&O.