Yesterday, the People’s Council of Vietnam’s Dong Nai province approved the adjustment of administrative boundaries within Long Thanh district to enable the construction of the country’s new Long Thanh International Airport. The development comes on the heels of burgeoning exports out of Vietnam as factories shift their production to the country from China.
The administrative boundaries of six communes will be adjusted to reallocate some of the land in these communes to serve as the site for the construction of Long Thanh International. The six affected communes within Dong Nai province’s Long Thanh district include Binh Son, Cam Duong, Long An, Long Phuoc, Bau Can and Suoi Trau.
During the adjustment process, the government said it will provide support and relocation to citizens displaced by site clearance for the new airport project.
Vietnam is one of several countries in Southeast Asia that has gained increased attention from air cargo and logistics industry providers as the production of goods has shifted there from China due to rising labor costs and increasingly volatile trade relations between the United States and China. Last year, JD.com invested in Vietnamese e-commerce platform Tiki, DHL extended same-day delivery service to the country, and sources told our sister publication, Cargo Facts, that Amazon will likely build a warehouse at Ho Chi Minh City’s Ton Son Nhat Airport (SGN).
However, both of Vietnam’s largest cargo airports – SGN and Hanoi (HAN) – are already classified as “level 3,” or the most congested airports, in the International Air Transportation Association’s 2019 Worldwide Slot Guidelines congestion report. Vietnam recently approved the expansion of SGN to include new cargo and MRO buildings, but air cargo providers have told Air Cargo World there is still need for increased capacity and logistics infrastructure in the country.
To increase capacity and strengthen infrastructure for air cargo, the Vietnamese government is in the process of drafting a feasibility report of Long Thanh Airport that will be voted upon by the Vietnamese National Assembly this October. If approved, construction of the new airport is targeted to begin early next year.
While the construction of the airport has been discussed by the Vietnamese government for some time, political backlash held up development of the project. With this new approval, the Vietnamese government has demonstrated its commitment to “increase investment and develop infrastructure” to support air cargo and logistics operations in the country.
Beyond changes in cost of production influencing trade flow shifts to Southeast Asia, trade to and from Vietnam has grown sharply in the first quarter of 2019 as a result of continued trade tensions between the United States and China. According to Newsweek, in the first quarter of 2019, U.S. imports from Vietnam increased 40.2% y-o-y, while imports from China declined 13.9%. U.S. President Donald Trump tweeted earlier this month of plans to raise tariffs by as much as 25%, which means that trade tensions between the U.S. and China are likely to continue. With this news, air cargo providers can anticipate further growth of air cargo in Southeast Asia in the coming months.
Beyond Vietnam’s efforts to attract air cargo logistics providers, other Southeast Asian countries, such as Thailand, Singapore and Malaysia, are also working to grow air cargo operations out of their respective airports.