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Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.

 

Vietnam set for rapid air cargo growth, but must expand network, says IATA

Thursday, August 28, 2014 > 08:41:07
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(Journal of Commerce)

A quarter of Vietnam’s trade by value is shipped by air, and the International Air Transport Association (IATA) expects the country to be the world’s fastest-growing air cargo market over the next three years, expanding at 6.6 percent a year.

But the heavy reliance on regional connections and its lack of adequate airport infrastructure are putting the brakes on the emerging Southeast Asian powerhouse. Routes within Asia dominate Vietnam’s air cargo market, with limited direct connectivity to Europe and Australia, and no non-stop North America connections.

In an address in Hanoi during Vietnam Aviation Day, IATA secretary general Tony Tyler said the availability of infrastructure is critical to support the growth of the aviation industry. He noted that Vietnam ranked 82nd in the Infrastructure Index of the World Economic Forum’s Global Competitiveness Report. Among the 10 ASEAN states, Vietnam was in sixth place.

“It is encouraging to see that the Vietnamese government has made it a priority to improve. This is positive,” Tyler said.

The Vietnamese government recently announced an ambitious aviation masterplan to have 26 airports operating by 2020. Expansion programs are underway at Noi Bai International Airport in Hanoi and at Ho Chi Minh International Airport.

“These expansion works would provide the needed capacity to support the aviation growth, and when the new Long Thanh Airport is ready, it will give a much needed boost to Ho Chi Minh City,” he said.

The Vietnam government has also announced plans to open some airports to foreign investment and management, as well as to privatize the Airports Corporation of Vietnam.

Vietnam has been a significant benefactor of a manufacturing shift out of China, and companies such as Intel, LG Electronics, Nokia, and Samsung have established production facilities in the country. It has been reported that by 2015, more than 40 percent of Samsung’s smartphones will be produced in Vietnam.

Tyler said with the technology industry being such a critical contributor to the economy, it is important that air cargo processes be as efficient as possible.

He said e-freight will help to improve the efficiency of air cargo by replacing paper processes with electronic documentation. IATA has been trying to improve the value proposition of the air cargo industry to stem the modal shift of its customers to cheaper ocean freight, and the paperless documentation will drive quality improvements.

“An important step to implementing e-freight is the e-air waybill (e-AWB). Vietnam Airlines is benefitting from the efficiencies of e-AWB and has implemented it for domestic freight. However, it is not able to do so for international freight as Vietnam has yet to ratify the Montreal Convention 99 (MC99),” Tyler said.

He explained that MC99 provides the legal framework for the use of an “electronic document of carriage”, paving the way for freight forwarders and airlines to use the e-AWB. “Given the importance of air cargo, I urge Vietnam to urgently ratify MC99 so that greater efficiencies can be achieved in Vietnam’s air cargo sector,” he said.


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