Why has Vietnam not produced containers?

When the world lacked masks and ventilators, many Vietnamese businesses entered the relief of thirst, but with containers was another story: Investment and production scale.

Currently, the global logistics industry is grappling with the shortage of containers . Due to Covid-19, the liberation and rotation of empty containers were delayed, while the sudden increase in the demand for exporting goods to Europe and the US resulted in serious scarcity of containers. In the past three months, container rental prices have increased continuously, from 2 to 10 times. Many businesses reflected that the increase in freight rates made export difficult, high inventories, even bankruptcy.

To solve this situation, some people say that why Vietnam does not produce containers by itself?

Invented by Malcolm McLean in the 30s of the last century, containers are a major innovation in the logistics industry, helping to standardize transport operations by setting a standard size for packing and handling goods. Goods are gathered, packed into containers at different locations and transported to the port. Due to the same size, the ship can be stowed on a ship faster, and can be stacked in multiple floors to help transport more cargo. When unloaded, the container is also easy to place on a train carriage or trailer for further transport to the destination.

Due to the superiority of containers, the shipbuilding industry gave birth to ships to carry containers, and also formed harbors for handling this type of cargo. International trade increased, the number of containers put into use more and more.

Cargo ships docked at Cai Mep port.  Image;  Truong Ha.

Cargo ships docked at Cai Mep port. Image; Truong Ha.

So who is the owner of these containers?

The first is the shipping lines. They ship and also provide containers for customers to pack as an added value of shipping service. Shipping lines such as Maersk, MSC, COSCO, CMA CGM, Hapag-Lloyd, ONE, Evergreen … are also large enterprises that can own many containers and have specialized departments to manage them everywhere. In the world.

The second group is container rental companies. These companies do not own the ship but only own the container, leased to shipping lines as well as individual customers. Major container rental companies in the world such as Textainer (TEX), Triton, CAI, Florens, Seaco, SeaCube, Beacon … and their container numbers are not small, accounting for 40% to 50% of the whole market.

Some logistics, trucking, and railway service companies also have their own containers, but the quantity is very small and often to diversify services, and thereby promote the company’s brand. In Vietnam, Vinafco, Ratraco, Vietnam Post … belong to this group.

Why don’t manufacturing businesses (shippers) own containers?

Container is a kind of shared packaging, it can only be effective when reused, rotated many times. If a container is exported to Europe, it costs the owner to transport them back to Vietnam to close another shipment, both additional shipping costs and waiting time, not to mention the initial initial investment to purchase containers. And if you have to worry about finding other customers to take advantage of packing in the afternoon, they will “encroach on the field” to do logistics services, which is contrary to the industry, often ineffective.

The selling price of a new container is currently about 4,000-5,000 USD. Until now, manufacturers from China are responsible for the majority of the global container supply. There are six Chinese companies that account for 90% of the global container volume, of which CIMC (based in Shenzhen) accounts for half.

In Vietnam, there are a few dozen enterprises operating in relation to containers (excluding service businesses), but most are not true manufacturing enterprises. Some enterprises used to produce containers, but due to objective conditions, they had to narrow their production. The rest are mainly repair and renovation businesses.

According to the leader of one of the aforementioned enterprises, the building of new containers is entirely within Vietnam’s ability, but there are many reasons for the units not interested in participating in production.

Container is a relatively specific item, if you want to do, you must have a committed and steady quantity order while the number of customers is not much. More importantly, unlike masks – a product that Vietnamese textile and garment enterprises quickly move when scarce, container production requires a large amount of capital to invest in factories, machinery, raw materials and labor. .

Vietnamese enterprises in this field are all small-scale, do not have the capital to invest in expanding production, so they have to accept the renovation and repair of containers and manufacture other mechanical products such as- trailers, semi-trailers to survive.

Container production materials are mainly iron and steel, but Vietnam is among the 14 largest steel producing countries in the world, has completed the entire process of the steel supply chain, why can’t it be produced by itself?

Answering this, the current leader of a large steel enterprise admits that container production is not difficult, but his business currently only wants to focus on the core area of ​​steel production. A container is one of many products that uses steel, and a company cannot run through all of those products.

Thus, the answer to the question of why Vietnam has not produced containers is somewhat clear: Enterprises that want to produce containers are still too small in scale and capacity, and businesses with capacity have not seen enough dynamism. force involved.

Looking back to 2020, Covid-19 created a fever of investment in the export of medical equipment and masks. Up to now, many manufacturers of “surfing” fashion masks have resigned, but a number of businesses have survived and rose. Covid-19 helps us to see an opportunity from the ordinary we never thought about.

When Vingroup entered the manufacture of the ventilator, within a month, all procedures and preparations were completed for the “made in Vietnam” ventilator to be born.

Will there be a similar bold decision, from a Vietnamese company with the capacity to help put Vietnam’s name on the map of container producing and exporting countries.