BMI believes that Cai Mep's positive throughput growth outlook for 2012 is in large part attributable to APM Terminal (APMT)'s operation of the terminal over the past year, as the company has poured in investment and attracted new clients operating on key trade routes. We believe APMT's presence will support continued growth at the port over the medium term (2012-2016) as it continues to improve the port's facilities and attract shipping lines keen to capitalise on Vietnam's positive macroeconomic outlook.
Cai Mep International Terminal (CMIT) at the Port of Ho Chi Minh City (also known as New Saigon Port), which is made up of a collection of terminals lying 50 kilometres (km) away from Vietnam's capital city, is on course to handle nearly 600,000 twenty foot equivalent units (TEUs) in 2012 - its first full calendar year of operation - according to projections from Maersk Line sister company APMT. CMIT accepted its first vessel on March 30 2011 and in the following nine months to 2012 handled 186,000TEUs.
APMT's strong growth projection for CMIT in 2012 supports BMI's forecast for the Port of Ho Chi Minh City over the medium term. In 2010 (last available data) the port handled 2.85mn TEUs, growing 17.2% from 2009. While we expect this growth to slow year-on-year to 7.9% in 2012, this still represents solid throughput growth. Over the medium term (2012-2016), we believe the port's positive growth will continue. We forecast TEU throughput to grow at an annual average of 6.7% over the period, bringing the total to 4.1mn TEUs in 2016.
|Port of Ho Chi Minh City Total Container Throughput, 2007-2016 (TEU and % change y-o-y)|
BMI highlights the substantial investments APMT has made in CMIT since it opened in March 2011 as an important driver of growth. In addition to helping to construct the port, which it did through a joint venture with Saigon Port and Vietnman National Shipping Lines (Vinalines), APMT purchased two laden reach stackers, an empty reach stacker, two empty container handlers and a 25-tonne forklift - all of which were delivered by Konecranes in 2011. Weak infrastructure is one of the main factors holding back Vietnam's shipping sector - the country ranks 111th out of 145 countries on the World Economic Forum's Global Competitiveness Report on the Quality of Port Infrastructure. As such, APMT's commitment to improving CMIT's facilities is an important step both for the terminal and the country's shipping sector as a whole.
Investment in the port has allowed Cai Mep to attract a client base of some of the major players in the box shipping sector. While a foregone conclusion, given APMT's close connection with the company, Maersk Line began pulling into the port in August 2011, boosting throughput as expected. More significantly, CMIT has added CMA CGM and the Grand Alliance - comprising shipping lines Hapag- Lloyd (HL), Nippon Yusen Kaisha (NYK), and Orient Overseas Container Line (CL) - to its client list. These lines not only provide positive prospects for the port given their direct impact on throughput volumes, but also because their presence signals the industry's confidence in the terminal's growth outlook and growing role in the region.
|A Long Way To Go|
|World Economic Forum's Global Competitiveness Report On Quality Of Port Infrastructure (Scored out of 7)|
An important aspect of the addition of these lines to the terminal is that they have exposed CMIT to the two largest maritime trade routes: Asia-Europe and Asia-America. Maersk has added the port to its Transpacific string from Asia to North America, while CMA CGM and the Grand Alliance have placed it on their Asia-Europe routes, marking the first time Vietnam had been directly connected on either of these trade routes.
BMI highlights that Vietnam previously only played a role as a feeder port, relying on the transhipment of containers through one of Asia's larger, better equipped ports such as Singapore. Exposure to these routes is in large part attributable to the port's ability to handle ultra-large container ships, which are becoming the standard for shipping containers on Asia-Europe trade routes. This was demonstrated in
December 2011, when CMA CGM's 13,820TEU Laperouse docked at the terminal. We believe CMIT's proven capacity for handling these vessels marks an important step for the terminal and will be a key driver of growth over the medium term.
Furthermore, BMI highlights the effect Vietnam's positive macroeconomic outlook will have on throughput volumes at CMIT. Nominal GDP is forecast to grow at an average annual rate of 6.8% over the medium term, with GDP per capita set to grow almost twice as fast over the period, at 12.5% annually. A key driver of this growth will be the country's booming export sector. By 2016 we predict the country's exports to climb 83% to US$178.6bn, from their 2011 level of US$97.8bn, providing a boost to the country's shipping sector. Additionally, CMIT's strategic location some 50km upriver from Vietnam's capital, Ho Chi Minh City, will make it an attractive option for shipping lines looking to take advantage of this burgeoning growth.