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Facilitating Trade through Competitive, Low Carbon Transport: The Case for Vietnam’s Inland and Coastal Waterways

January 7, 2014

View the full infographic: Investing in Vietnam’s Inland and Coastal Waterways for Sustainable Growth

Key Findings:

•    As Vietnam’s major sources of past growth are quickly depleting, and as the risks posed by climate change are intensifying, the country faces the challenge of finding new sources of growth and reducing emissions that contribute to climate change.

•    Promoting waterborne transport can be an effective way of meeting the twin challenges of boosting growth and protecting the environment.

•    Inland waterway transport (IWT) and coastal shipping are essential to the Vietnamese economy, accounting for a combined 52 percent of freight tonnage, and directly facilitating trade for the rural poor and near-poor.

•    The economic and environmental sustainability of these vital modes has been undermined by insufficient investments to expand, improve, and preserve the country’s waterborne transport networks, leading to the prevalence of small, inefficient vessels.

•    The average river-going cargo vessel in Vietnam’s national fleet has a carrying capacity of approximately 100 deadweight tons, compared to 2,500 deadweight tons in Western Europe.

•    Larger vessels result in lower transport costs and emissions of local pollutants and greenhouse gases (GHGs) per ton-kilometer. Larger vessels are also safer.

•    In Vietnam, transport costs per ton-km on a 700-ton vessel are 60 percent lower than on a 100-ton vessel. Carbon dioxide emissions per ton-kilometer reduce at approximately the same rate.

•    Most economic benefits from investments in waterborne transport are expected to originate from efficiency gains in the transportation of commodities already captured by waterways, rather than from modal shift away from the roads sector.

Key Recommendations:

•    Invest in expanding the cargo-carrying capacity of the highest-priority IWT corridors: Corridor 1 of the Mekong River Delta (from Vinh Long to Ho Chi Minh City) and Corridor 1 of the Red River Delta (from Quang Ninh to Viet Tri).

•    Introduce a Waterway Maintenance Fund to finance the annual maintenance of the core inland waterway network through vessel registration fees.

•    Upgrade the capacity of a container terminal at Haiphong Port to better handle coastal shipments of containerized commodities.

•    Promote public-private arrangements, on a pilot basis, to promote engine renewal by the large-capacity portion of the national barge fleet.

•    Facilitate multimodal transportation through better multimodal linkages between rivers, ports, and highways, and foster the provision of value-added logistics services.

•    Promote broader awareness among shippers, particularly small- and medium-sized enterprises, of modal choice tradeoffs in terms of logistics costs.