Cross-country freight forwarding in Southeast Asia has become a viral discussion topic in terms of the economic aspects involved. Although the China-Laos railway mega project connecting the Lao PDR capital of Vientiane and Kunming in southern China has been widely hailed for being a new option for shipping goods from China to Europe, it should not be overlooked that Vietnam is now offering cross-country freight service to Europe as well.

The prevalence of the Delta variant of the COVID-19 pandemic in Vietnam triggered lockdown measures in key cities such as Ho Chi Minh, Hanoi, Da Nang, and others, which are all home to companies producing famous brands from all over the world. Shutdowns delayed industrial processes and restricted mobility, producing shortages of raw materials. Transporting goods to global markets by trucks and ships generated traffic congestion and the inspection of commodities crossing borders took longer than it did in pre-COVID days. Against the backdrop of these setbacks, on 20 July 2021, Vietnam’s Rail Transport and Trade Joint Stock Company (Ratraco), a subsidiary of Vietnam Railways, together with shipping businesses from other nations, experimented with the first freight train from Yen Vien Railway Station in Hanoi to Liege in Belgium. Containers will subsequently be further transported to Rotterdam in the Netherlands by truck. The first train contained shipments of textiles, shoes, and electronic equipment.

The first freight train to Europe from Vietnam went smoothly and took around 25 days, almost half the time typically involved in shipping goods by sea from Vietnam to Europe. In addition to being quicker, it also helps solve the problem of labor and container shortages at ports. Currently, Vietnam Railways is continuing to develop its services to carry commodities from Vietnam to other nations in conjunction with China Railways, which supplied financial support and empty containers for this project. It also assists in providing international freight forwarding to China, Europe, Russia, Central Asia, and Southeast Asia.

However, Vietnam's international freight service via rail still has limitations in terms of the size of its warehouses accommodating operations twice a week, which are small compared to the Lao-China Railway line. But it is a no less interesting alternative, and nobody can dispute that rail is beginning to play a vital part in the region's transit network, further connecting Southeast Asia to the world in the near future.

Customers interested in doing business in the CLMV or Great Mekong Subregion (GMS) countries (Cambodia, Laos, Myanmar, and Vietnam) can contact Siam Commercial Bank’s overseas branches, which are ready to provide the services they need.  For more information, please visit https://scb.co.th/en/corporate-banking/international-network.html

Information courtesy of Siam Commercial Bank, Ho Chi Minh City Branch, Vietnam https://scb.co.th/vn/corporate-banking.html

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