Steelmaker Hoa Phat plans to manufacture 500,000 twenty-foot equivalent unit containers a year to mitigate a shortage since containers are stuck at ports after Covid-19 hit trade.
It plans to build its first container manufacturing factory in Binh Duong or Dong Nai province and near Cat Lai Port in HCMC and Cai Mep – Thi Vai International Port in Ba Ria – Vung Tau Province.
The southern region has an especially high demand for containers. Market research by Hoa Phat in fact found that three out of every four containers are used there.
Nguyen Manh Tuan, vice chairman of the Hoa Phat Group, said the containers would be made of weather-resistant hot-rolled coil steel with enhanced corrosion resistance produced at its Hoa Phat Dung Quat 2 steel plant to be launched in early 2022.
The logistics sector is suffering from a severe container shortage since many remain in various ports around the world, unable to offload their goods, while demand for containers to export to Europe and the U.S. is high.
At the end of 2020, the Vietnam Maritime Administration had to order container shipping lines to publicly declare their freight rates and surcharges, saying it had received numerous complaints about inflated prices due to a shortage of containers and warning it would not tolerate gouging.
Most shipping lines have hiked freight by 2-10 times in the last three months.
In Vietnam, there is no container production.
Tuan explained that the price of weather-resistant hot-rolled coil steel used for making containers is high, and would cause losses for companies if they have to import it.
“Hoa Phat can produce this type of steel,” he said.