TCCT The Loadstar (UK), a logistics market news website, has said that Korea is promoting container production through the establishment of a container factory in Vietnam in the middle of next year.
State-backed ship finance provider Korea Ocean Business Corporation (KOBC) announced a tie-up with flagship liner operator HMM, compatriot communications equipment maker Seojin System and container technology specialist Ace Engineering to start a container factory in Vietnam.
Seojin System and Ace Engineering will open a factory in Haiphong to produce roughly 100,000 containers annually. KBOC said that setting up a container factory in Vietnam will help keep production costs low, improve the competitiveness of Korean shipping carriers, including HMM - a large shipping carrier in Vietnam.
Korea is currently the world’s fourth largest goods exporter. In 2020, Korea’s exports account for more than 36.9 percent of GDP. However, from the beginning of this year, the serious shortage of empty containers since is negatively affecting the export businesses as well as shipping businesses in this country.
The import demand of US and Western countries has exploded recently; meanwhile, the Covid-19 pandemic caused congestion in many major seaports. It has slowed container turnover, pushing freight rates to record highs in the recent period.
The serious shortage of empty containers causes many difficulties for many export-dependent countries like South Korea
Currently, China is the world’s largest container producer, accounting for 90% of all global container production. The shortage of empty container supply makes the need to supplier diversity increasing, especially for export-dependent countries like South Korea
Vietnam predominates at container production costs in the world thanks to the low land and labor cost, mechanical advantages... Since the end of 2007, Vinashin-TGC container factory belongs to Vietnam Shipbuilding Industry Group - has been put into operation with the design capacity of 45,000 TEU/year for the phase I (1 TEU is equivalent to a 20-foot container). However, this factory stopped working when Vinashin went bankrupt.
In early 2021, Hoa Phat Group decided to produce empty containers with an expected capacity of 500,000 TEUs/year in Hai Phong and the Southeast. The first factory of Hoa Phat is expected to be in the South, Binh Duong or Dong Nai province, close to Cat Lai, Cai Mep – Thi Vai ports. According to Hoa Phat’s research, in recent years, 70% of container demand has come from the South. Only 1 out of 4 containers is used in the North.
Currently, Hoa Phat is recruiting personnel to immediately start building the factory. It is expected that at the beginning of the second quarter of 2022, Hoa Phat can supply its branded empty container to the market.