“Competition is intense” – Interview on Vietnam with Maggie Foong

Where were you coming from and how do you like life in Vietnam? How did you get to your position in Vietnam?
I came from Singapore and have lived in Vietnam since 2003. When I first arrived Ho Chi Minh City, the pace of life was slow but progress has brought many changes to this country and has transformed Ho Chi Minh City to a busy vibrant city with people from all walks of life living and working here. Yes, I do enjoy living in Vietnam. I worked for Jardine Shipping Agencies in Singapore and was seconded to the Ho Chi Minh office in 2003. In 2012, I joined UASC as the General Manager for the local Agency office. And on 1 July 2017, I joined Hapag-Lloyd as Country Manager.

How is Hapag-Lloyd perceived in the Vietnamese market?
Hapag-Lloyd is perceived as a well established, reliable and reputable Shipping Line in Vietnam.

Vietnam is emerging as one of the fastest developing countries in the region — next to China, what are the future prospects for the country and its economy?
Vietnam achieved GDP 6.81% in 2017 and the Country’s targeted GDP growth is 6.5 - 6.7% in 2018. In the first quarter of this year, GDP grew 7.38% according to the Country’s general statistics office. Vietnam depends on its manufacturing and exports for its economy. With an abundant supply of young and well-educated workers, Vietnam is able to attract foreign investment to labour intensive manufacturing of low-value products such as furniture and garments. Due to its low labour cost and attractive tax incentives from the government, many foreign investments have set up manufacturing plants in the many industrial parks in North, Central and South Vietnam. Samsung, Nokia, Intel, Panasonic and LG Electronics are some of the reknown companies. The government is working hard to draw in more foreign investors and in recent years, we have seen a shift of factories from China to Vietnam and this trend is expected to continue as China becomes more expensive and facing geopolitical issues. The Free Trade Agreement between Vietnam and EU is expected to be signed by the end of this year. The EU is the second biggest export market of Vietnam and the impact of this will be an increase in both imports and exports with the EU from 2019.

Another trade pact, CPTPP was signed in March 2018. For Hapag-Lloyd, this means more opportunities to Canada and Latin America Trade.

Agriculture growth is in line with the government’s target of 2.8-3% in 2018. This will ensure that coffee remains as a key export and enable Vietnam to maintain its no. 2 spot in the global market as coffee exporter.

All this is good news for the economy of Vietnam and for Hapag-Lloyd, for the next 5 years.

As a high-manufacturing and high-agricultural country, what are some of the biggest exports and imports of Vietnam? What are the most important export and import goods transported on our ships?

Main Exports from Vietnam are furniture, coffee, footwear, garment and textile, chemical products, rice, plastic material, fruits & vegetables, mineral products

Main imports to Vietnam are iron and steel, plastic, cotton, paper, fruits and vegetables

On Hapag-Lloyd vessels, we carry furniture, garments, shoes, coffee, plastic products, rice and some frozen seafood. Brand names like Adidas, Nike, Puma, Ecco, Gap, Guess, Fila, H&M, Zara to name a few are carried on Hapag-Lloyd vessels. Major exports are to Europe, North America, Canada, Latin America and the Middle East.

Imports on Hapag-Lloyd vessels are plastic resin, cotton & textile fabrics, machineries, solar panels, paper and frozen meat. Most imports are from Europe, North America, Middle East and Intra Asia.

Vietnam is the second biggest exporter of coffee, where does it go to and is Hapag-Lloyd working to bring this coffee to the world?

According to the statistics from the Vietnam Customs, 530,000MT of coffee was exported in Q1 2018 which is an increase of almost 17% over Q1 2017. The top 5 importers of coffee from Vietnam are Germany, US, Indonesia, Italy and Spain.

Hapag-Lloyd is one of the major coffee carriers from Vietnam. In the 1st half of this year, we carried a total of 3,817x20’. 29% was shipped to Germany, 15% to Spain, 15% to Italy and 13% to Mexico.

Who are our most important customers from the area? What are we doing to make their experiences better?

Our most important customers are NVOs (non-vehicle operators) Kuehne+Nagel, DB Schenker, DSV, Panalpina and DHL and BCOs Nike and Sabic. All these NVOs are the top exporters from Vietnam and have a high expectation on good service.

We have dedicated contact persons from Sales Co-Ordination and Customer Service assigned to provide support to our most important customers. The team has strong product knowledge, knows and understands each customer’s requirements. We want our customers to be satisfied with our overall services and at the same time enjoy working with us.

What are some of our current and potential future key opportunities and tasks in the area?

Current task is to strengthen relationship with our customers and to expand our customer base.
We want to drive more imports into Ho Chi Minh. Another priority is to increase our presence in the North.

Our current services will need to be re-designed, possibly together with our Partners, to cater to the growth in the next 5 years. Focus on Europe, Transpacific, Mediterranean and the Middle East Trades.

A new international Terminal will be operationally ready by 3rd quarter of this year in Cai Mep Vung Tau. This event may create an opportunity for cost improvement due to competition among the existing terminals.

To the South, in the Mekong area, there is a potential for direct cargo acceptance instead of via Vung Tau and Ho Chi Minh in the future. We have started to review this market closely and hopefully this will give us the opportunity to increase our participation in the reefer traffic.

The Vietnamese country is rapidly thriving with better prospects for the future than ever before. What were the challenges for Hapag-Lloyd and the country, and what are some of the challenges now for Hapag-Lloyd and the country?

For Hapag-Lloyd, competition is intense. Rates are under pressure. Customers have more options now as our competitors are constantly upgrading their product and services. Competitors going for market share is another challenge to rate stability.

Domestic feeder capacity is tight and feeder rates will become more expensive.

For the country, operational and Customs inefficiency affects the productivity of shipping lines. Overdue containers are held in the Ports for very long time. Port Management is somewhat dis-organized and changes in policy are issued at very short notice.

The government of Vietnam are now investing and looking for ways to make Vietnam a ‘logistics center of South-East Asia.’ In light of the Vietnam’s new a deep-water port opening at Haiphong late this month, what other improvements would you like to see?

The opening of the Haiphong International Container Port (HICT) is a pride and big achievement for the country as this is the only International Port in the North of Vietnam. The port can receive vessels up to 14,000 teu capacity eventually, and I would like to see Hapag-Lloyd with direct call in Haiphong soon. I hope to see HICT as the transhipment hub for Danang and Quihnon.

In Ho Chi Minh and Cai Mep Vung Tau, I would like to see improvements to the road system linking Ports, ICDs and container depots; and barging between Cai Mep Vung Tau and Ho Chi Minh.

I would also like to see the Customs improvement to streamline and simplify procedures and inter-governmental co-operation to expedite the process of permit approval and cargo inspection.

Hapag-Lloyd is now merged with UASC, how has the integration been on your side in Vietnam?

We had a smooth transition. Bringing two corporate cultures into one combined entity is not an easy task but fortunately for us, right from the beginning, the combined teams were mentally prepared for the merger and the primary focus was on the target 1+1=2. UASC staff received tremendous support and guidance from Hapag-Lloyd colleagues. As we approach July, we are almost a year into the merger, I am very happy that things work out well and we now have a motivated team, committed to doing the best and ready to face the challenges of the future. With the hard-working and resilient nature of the Vietnamese, I am very confident that we will achieve our targets this year.