Myanmar looks set to be dogged by stubborn capacity constraints in the coming years, sources have told Asia Cargo News.
The key problem is that ports and airports lack both infrastructure and a modernized way to operate, something further complicated by poor overall connectivity.
Currently Myanmar ports’ capacity for containers is estimated at 2.6 million TEUs and at 35 million tons for general cargo by consulting firm Roland Berger. Yangon, the commercial centre, is served by a string of city centre ports with Myanmar International Terminals Thilawa (MITT), the country’s only significant port facility, some 25 km outside the city.
MITT has recently installed new container handling equipment including two quay cranes, nine yard cranes and machinery to complement current yard and gate expansions, parent company Hutchison Ports told Asia Cargo News.
MITT is the only terminal in the Yangon area operating a barge service, which brings cargo from industrial zones located north of the city and even up to the middle of the country. There is also a rail line linked to the terminal connecting it to other major cities around the country, Hutchison added.
MITT has Myanmar’s highest container capacity, and has recently landed COSCO’s business, as the Chinese line is commencing its China direct container service to MITT as of mid-January, but overall, Myanmar’s port facilities are simply not enough to cope with the country’s rapid economic growth.
“The most concrete port investment plans as of today are in Thilawa, but Thilawa’s capacity expansion in 2018 is not expected to be major and may be hindered by dredging and vessel congestion,” Dieter Billen, Roland Berger’s Myanmar head, told Asia Cargo News.
Much of that congestion is caused not by the lack of hardware, but by poor policies surrounding it, which don’t appear likely to change anytime soon.
Storage facilities at Yangon ports, which are already limited in size, are burdened by rules such as those which prohibit shippers from sealing their own containers at their premises. “It’s all done at the port,” Angela Lee, Myanmar country manager for Panalpina told Asia Cargo News.
Nor is Lee optimistic that the rules will change. Asked if the government was open to the idea of reforming procedures, Lee said it would take a while. “[The authorities are] still studying various options such as dry ports and bonded warehouses. This has not yet moved beyond the exploration stage,” she said.
Where there are some signs of progress is on Myanmar’s roads, though the progress is mostly limited to local areas rather than as part of some nationwide plan and, even then, the gains are limited.
“There is a new bridge that has been approved to be constructed that will solve the Bago River issue,” Allan Davidson, general manager of truck hire company Yoma Fleet told Asia Cargo News. The bridge currently connecting Thilawa to Yangon over the Bago River has a 25-ton loading limit, which makes moving containers difficult.
“The bigger issue now is the curfew blocking all heavy truck traffic in [Yangon] outside of 9:00 pm to 6:00 am. It can be made to work, but the industry is yet to make the adjustments it needs with multiple trailers, etc,” Davidson added.
Much more important, experts say, is getting policy changed on the Yangon–Mandalay expressway. Large trucks carrying goods are prohibited on this piece of road, which connects Myanmar’s top two cities, even though large buses moving people zip along it.
“The industry needs to be much more proactive in rattling the cage to get the doors opened. Unfortunately, it seems it will need the direct intervention of the Lady to bypass the crony influence at ministerial level,” he said.
Given the difficult position state counsellor Aung San Suu Kyi – “the Lady” in question – has in leading an inexperienced political party while hemmed in by Myanmar’s powerful military, change, if it comes at all, might be slow.
Despite the current shortages in capacity, the more worrying shortages are yet to come. In the mid- to long-term, Yangon and Thilawa ports will not be sufficient to cater to Myanmar’s growing demand. Given the lead time of building large-scale port infrastructure, systematic planning for a new deepsea port is urgent.
“(T)here is potential for a new deepsea port closer to Yangon, but uncertainty about competing plans hinder effective planning and financing,” said Billen.
Seaports are not alone when it comes to ineffective planning in Myanmar; other shortcomings in Myanmar’s infrastructure connectivity are not being dealt with, either, either long- or short-term. The general view is that there is potential for more goods to be moved by both rail and river, but that it is not being taken advantage of.
Myanmar is known to be negotiating with French and Japanese companies for a deal involving building and management of a greatly improved rail network. “But we don’t see much progress, except for a few container moves to Mandalay as part of a trial run. The rail network is currently unable to carry high-cube containers.” said Lee.
The situation is similar with the country’s river network, where the government is encouraging the building of jetties to accommodate larger vessels, but issues such as river depths, payment of jetty fees and the lack of shallow draft vessels get in the way. However, these “can be overcome,” according to Jason Chiang, a director with Ocean Shipping Consultants in Singapore.
The most telling comment comes from the Asian Development Bank, which in a recent Transport Sector Policy Note, urged the government to improve the Ayeyarwady riverbed and navigation conditions up to Mandalay. The goal they suggest is a minimum river depth of two metres.
“We think that if it is fully carried out over the entire river, benefits over 15 years could reach US$3 billion, making it a very efficient place to invest,” the ADB said.
The ADB made 12 recommendations in total. One move as simple as allowing trucks on the Yangon–Mandalay expressway alongside “moderate improvement” of its surface would save US$10.7 billion in transport costs over the next 15 years, it added.
By Michael Mackey
Southeast Asia Correspondent | Bangkok