The cost of loading and unloading is "bottleneck"

Vu Anh Minh, Chairman of Board of Members of Vietnam Railway Corporation (VNR)

What is the main reason causing the logistics cost of railway is not really competitive with other modes of transport?

The national railway network has a total length of more than 4,100km, mainly with a gauge of 1,000mm and 290 stations on the line, but most of it is small-scale with old infrastructure. Thousands of bridges on railway lines are degraded and slow to be renovated and repaired. This is one of the reasons for the limited capacity of railway transport. In addition, the signal information system on the routes is not synchronised in terms of technology and technique. Nearly 300 locomotives are in operation, but all of them are low-power and consume a lot of fuel, causing difficulties and obstacles in the operation, maintenance and repair.

The connectivity of the railway with other modes of transport is still very poor and the connections are used very little. The warehousing system is degraded, the surface of the yards are almost not qualified for handling of container cargo (mainly bulk cargo handling). Loading and unloading goods at railway stations is mainly manual, not applying mechanisation, the organisation of multimodal transport business is still very limited, not yet accessing logistics services for goods freight transport, leading to time in storage, large storage yards and increased freight rates.

Should we speed up high-speed rail to develop rail transport?

Given our geographic conditions, natural conditions and geopolitical conditions, the development of high-speed rail is very necessary in the future. For example, with transport less than 200 km/h is the distance of road, from 200-300 km/h is the intersection of road and railway, from 300-1,500 km/h is the distance of railway. 1,500-2,000 km/h is the intersection between railway and aviation. More than 2,000 km/h is the distance of the airline.

With a speed of 300 km/h, it will take six hours to get from Hanoi to HCM City even if stopping at the station, because the railway from Hanoi to HCM City is 1,540 km. On the basis of routes, distances to localities, industrial parks and warehouses, customers can choose the main mode of transportation and which to support. Transportation costs on the railway lines are not high, but the cost of handling at two ends is a "bottleneck". Currently, the railway does not have qualified warehouses, causing costs to increase, leading to loss of competition. If there are railway-lines connecting from industrial zones to seaports, businesses only need to pack goods into containers and take them on board to go to the port to load them on board. Shortened time, low cost and clearly seen benefits for businesses.

If there are railways connecting industrial zones to seaports, enterprises only need to pack goods into containers and take them on board to go to the port to load them on board. Transporting by ship can carry large amounts of cargo while reducing the load on the road. As for the economic aspect, shipping by rail, the price will be cheaper, and then the price of goods will be better competitive. Therefore, we must invest in high-speed rail as soon as possible.

How will the railway industry need the allocation of resources to overcome the limitations?

The need for investment capital for development is huge, but only 2% of the State budget is invested in railways. Each year, the budget only grants more than VND 2,000 billion for infrastructure maintenance. This number only meets more than 30% of actual needs. With a medium-term capital package for 2021 - 2026 for the transport sector, it is hoped that the Ministry of Transport will pay attention to the railway sector and arrange funding to implement projects to improve these projects bottlenecks in the current railway transport, in which the main focus would be on improving and upgrading main roads as well as a number of important routes to improve the throughput of infrastructure.

The Ministry of Transport decided to approve the railway development strategy for 2015 - 2030, in which all projects and items will be implemented from now to 2030. However, the first package of VND 7,000 billion is being deployed (compared with a huge cost of VND 110,000 billion at the time of construction). There is hope that in the coming time, the Ministry of Transport will concentrate resources, allocate more appropriately and pay more attention to railways so we can successfully implement the strategy approved by the Prime Minister.