"Vietnam Shipping Report Q4 2013" Published

Vietnam's economic recovery is beginning to lose its momentum, with the country recording a relatively weak real GDP growth figure of 5.0% year-on-year (y-o-y) in Q2 2013, up only slightly from 4.9% in Q1 2013. The latest GDP print also suggests to us that further efforts by the Vietnamese government to speed up the restructuring of debt-laden banks and restart lending to small and medium-sized enterprises (SMEs) may be necessary to support economic growth over the coming quarters. Moreover, given that we have recently begun to see signs of a slowdown in economic activity across the region, 2013 looks increasingly precarious for the Vietnamese economy. That said, the shipping sector picture is not too sluggish at all at the moment, with healthy tonnage growth forecast over the medium term at the Port of Ho Chi Minh City.

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Foreign direct investment (FDI) will continue to play a crucial role in driving Vietnam's economic growth over the coming quarters, and we view the recent uptick in FDI inflows into the country as a positive sign that the economic rebound is gathering pace. The shipping sector will be no different in this regard.

According to figures released by the Ministry of Planning and Investment (MPI), FDI inflows into Vietnam surged by a whopping 17% y-o-y to US$8.2bn in the first four months of this year. This is in line with our view that increasingly bullish sentiment towards Vietnam on the back of improving macroeconomic fundamentals, stabilising credit conditions, and the potential for long-term economic growth, are likely to provide a significant boost to FDI inflows into the country over the coming quarters.

The Port of Ho Chi Minh City is once again Vietnam's outperformer in terms of tonnage throughput y-o-y growth - forecast to increase 6.72% this year to reach 38.45mn tonnes, compared with the Port of Da Nang's predicted annual growth of 3.85% (4.14mn tonnes). That said, the country's main port at Ho Chi Minh City will come behind the Port of Da Nang in terms of box throughput annual growth this year with the former expected to come in at 7.18%, while the latter will enjoy healthy y-o-y growth of 9.37%.

Headline Industry Data

* 2013 tonnage throughput at the Port of Ho Chi Minh City is forecast to grow 6.72% to 38.45mn tonnes.
* 2013 tonnage throughput at the Port of Da Nang is forecast to increase 3.85% to 4.14mn tonnes.
* 2013 container throughput at the Port of Ho Chi Minh City is forecast to rise 7.18% to 3.56mn twentyfoot equivalent units (TEUs).
* 2013 container throughput at the Port of Da Nang is forecast to increase 9.37% to 131,951TEUs.
* 2013 total trade real growth is forecast to increase 5.05%.

Key Industry Trends

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